Diesel Prices Surpass Petrol in Europe Amid Refining Constraints and Geopolitics
Millions of European diesel drivers are facing a double squeeze due to rising fuel costs. The average price of diesel in Europe has surpassed that of petrol, with a gap of about 8% between the two fuels. This shift is largely driven by refining constraints and geopolitical tensions.
The main driver behind the increase in diesel prices is the refining process itself, not crude oil. Tightening refining capacity and low diesel stocks have pushed up the margins built into every litre of fuel. Additionally, diesel is a critical component for freight, farming, and heating, making supply shortages more pronounced.
The situation has been exacerbated by the recent increase in oil prices due to tensions around the Strait of Hormuz. US President Donald Trump's decision to rule out extending a framework agreement with Iran led to a 2% jump in oil prices, with Brent crude rising to about $90.60 per barrel and the US benchmark reaching $84.20.
The shift towards petrol as the more affordable option is significant for drivers who have traditionally chosen diesel cars due to their lower fuel costs. With the financial logic of diesel now under pressure, many are considering alternative options such as hybrid or electric vehicles.