Diesel Shortage Worsens Ahead of Peak Winter Demand Amid Gulf and Ukraine Conflict
The global diesel fuel market is facing a severe shortage ahead of peak winter demand. The crisis has been exacerbated by ongoing conflicts in the Persian Gulf and Ukraine, which have disrupted supply chains and led to shortages in several regions. In Southeast Asia, Reuters reported that palm oil farmers are experiencing diesel supply shortages and rising prices.
In the United States, diesel fuel exports reached an all-time high of 1.9 million barrels per day in early August, while refineries in Russia have been affected by Ukrainian drone attacks on refineries. This has led to a ban on Russian diesel exports, which is set to impact large fuel importers such as the European Union.
The EU's vulnerability to global market disruptions has increased due to its own supply chain issues, including the closure of up to 30 refineries between 2009 and 2024. 'Europe has a tremendous diesel problem,' said Eugene Lindell, head of refined products at consultancy FGE NexantECA.
Analysts predict that high prices will spread beyond fuel costs, affecting consumer goods and services. Joe DeLaura, senior energy strategist at Rabobank, stated that 'crude oil is just the input, but diesel is the everything the industrial economy runs on.'