Diesel Refining Margin Hits Record High Amid Global Supply Disruptions
The US diesel refining margin hit an all-time high on August 17th, reaching $102.20 per barrel. This record-breaking figure was driven by global supply disruptions caused by wars in Iran and Ukraine, combined with rising fuel consumption for agricultural activity.
The diesel crack, which measures the difference between diesel futures prices and West Texas Intermediate (WTI) crude oil, has been on a tear, recording intraday records in five of the past six trading sessions. On August 17th, at 11:56 AM local time, the diesel crack was trading at $99.82 per barrel, up 2.4% from Friday's level.
The surge in diesel cracks reflects growing concerns over fuel availability after recent attacks on oil refineries in the Middle East exacerbated existing supply disruptions. According to the International Energy Agency (IEA), global crude oil refinery throughput averaged 80.9 million barrels per day in July, a 5 million barrel decrease from the same period last year.
Shohruh Zukhritdinov, chief executive of NitrolOil, noted that while US refineries are increasing diesel production to take advantage of high crack spreads, domestic inventories continue to decline amid strong export demand. 'The US is producing more diesel, not less, but the crack remains above $100,' Zukhritdinov said.