Diesel Supply Crunch Looms as Crack Spread Hits Record High

The diesel crack spread has reached an all-time record of $102 a barrel, leaving analysts and experts warning of a supply crunch in the coming months.

This is despite crude oil prices remaining relatively stable at below $100 a barrel. The diesel crack spread measures the difference between the cost of crude oil and the selling price of diesel, with the current figure representing a four to six times increase from normal levels.

Experts point to tight diesel inventories as a key driver of the issue, with U.S. distillate inventories sitting at their lowest level since 1996 in early August. This is exacerbated by global supply disruptions caused by factors such as Russia's ban on international diesel sales and Middle Eastern exports being squeezed.

The situation has significant implications for trucking operations, which account for nearly all transportation of goods in the U.S. With wholesale diesel prices expected to rise sharply, pump prices are likely to follow suit, despite crude oil prices remaining stable.