Diesel Prices Skyrocket as Middle East Conflict Takes Toll on Global Fuel Supplies

The ongoing Middle East conflict has caused a diesel crisis that threatens to outlast the war itself. Despite crude oil prices being below $100 per barrel, fuel prices have skyrocketed, with diesel in Europe up by 70% from pre-war levels.

Refining capacity is down due to damage in the Middle East and Ukraine's drone strikes against Russian refineries, which has led to a ban on exports. The world's second-largest diesel exporter, Russia, is closed for business, leaving the market even tighter.

The United States has been ramping up fuel exports, but this has been driven by higher-than-usual refinery utilization rates and inventory draws, which may become a problem as U.S. inventories are already tight.

Eugene Lindell, head of refined products at consultancy FGE NexantECA, warned that Europe's diesel problem will get ugly, with extremely high flat prices expected.