Diesel Shortage Takes Center Stage as Oil Prices Rise
Oil prices rose on Monday after US President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz, restoring some geopolitical premium to Brent and West Texas Intermediate. Brent crude increased by about 1.5% to $106 a barrel in Asian trading, while WTI gained roughly 1.1% to $93.40.
However, the more important shortage is now diesel and refining capacity, which remain considerably tighter than crude itself. This distinction matters for inflation, as Middle East crude flows are recovering, but refiners are still struggling to replace lost diesel supply from the Gulf and Russia.
The International Energy Agency reported that US diesel prices exceeded the equivalent of $200 a barrel in early September. The agency also stated that Gulf diesel and gasoil exports averaged just 390,000 barrels a day in August, little more than a quarter of pre-war levels.