Diesel Shortage Takes Centre Stage as Oil Prices Rise Amid Geopolitical Tensions
Oil prices surged 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 rose by about 1.5% to $106 a barrel in Asian trading, while WTI gained roughly 1.1% to $93.40.
The move reflected renewed concern over Middle East supply routes, but the more important shortage is increasingly further down the barrel: diesel and refining capacity remain considerably tighter than crude itself.
That distinction matters for inflation. Middle East crude flows are recovering, while refiners are still struggling to replace lost diesel supply from the Gulf and Russia. Preliminary Kpler data show exports from key Middle East producers are set to average 12.8 million barrels a day in September, the highest since the war began in February.
The tighter market is now in refined products. US diesel prices exceeded the equivalent of $200 a barrel in early September, and combined diesel exports from the Gulf and Russia were 1.6 million barrels a day below February levels, according to the International Energy Agency.