Diesel Shortage Looms as Refining Capacity Falls Short

The global diesel market is expected to tighten further in the coming months, leading to higher fuel prices and potentially affecting inflation targets. Industry officials warn that refining capacity has not kept pace with demand, resulting in a shortage of refined products.

Russell Hardy, CEO of Vitol Group, noted that despite increased crude oil flows from the Persian Gulf, only 1 million barrels per day out of an estimated 10 million are refined products. This has led to a drawdown on global surpluses and increased pressure on refining capacity.

Refineries in the Middle East, particularly in Iran and Russia, have been severely impacted by strikes and drone attacks. In addition, Russia has banned diesel exports until at least September 30th. US refineries are running at maximum capacity but may not be able to sustain this for much longer.