Diesel Prices Soar Above Record High Amid Refining Bottlenecks
Diesel prices have reached an all-time high of $5.897 per gallon in the United States, while Brent crude oil has hovered below $100 per barrel. This anomaly is due to a shortage of diesel fuel that occurs after crude oil leaves the market, not a scarcity of crude itself.
U.S. refineries are running near capacity, and international diesel supply has fallen, contributing to thin product inventories in key regions. As a result, a scarcity premium is added to diesel prices, which Brent alone does not capture.
The current shortage is complex, with elements of all three scenarios possible: high crude prices, refining issues, or regional supply problems. However, the unusually large diesel premium indicates that refining and product availability are playing an outsized role.