Diesel Prices Soar to Record Highs Amid Global Fuel Shortage
The global diesel market is facing unprecedented challenges due to ongoing conflicts in the Middle East and Russia's ban on diesel exports. The tension has pushed middle distillate cracks, which measure the difference between crude oil prices and diesel refined from it, to record highs.
This week, the ICE gasoil crack hit a record high of $79 per barrel, while the diesel crack in the United States is trading near its all-time high of over $100 per barrel. The market tightness is evident in timespreads, with the ICE gasoil Sep/Nov spread trading at a backwardation of $80/t.
The disruptions to Middle East and Russian diesel exports are expected to persist, particularly as global demand for diesel increases seasonally. According to ING's commodities strategists Warren Patterson and Ewa Manthey, 'the global refining system has little slack to make up for the disruptions we are currently seeing.'