Diesel Supply Crunch Threatens Economic Risk

Markets have been fixating on Brent crude, but diesel is where the real economic risk lies. The diesel crack spread, which measures the margin between crude and refined fuel, has become a concern due to Russian export bans, Middle-East refinery damage, and years of US refinery closures. These factors have reduced spare capacity just as autumn demand ramps up.

Diesel demand typically increases through autumn as harvests pick up, retailers stock up for the holidays, and colder weather boosts heating oil consumption.