Refined Product Crisis: A Permanent Energy Price Shock
The Iran war has pushed the global oil refining industry to the brink, signaling that diesel and petrol prices may remain elevated for years.
Deal or no deal, the global energy inflation shock is far from over.
Benchmark Brent crude oil is currently around $90 a barrel, up about 25% from levels at the outbreak of the conflict on Feb 28. However, refined products have not enjoyed the same relief.
The loss of Gulf crude led many refiners to curtail operations, and this strain was amplified by months of relentless Ukrainian strikes on Russian energy infrastructure, which cut Russia's refining throughput by 30%.
Global oil stocks fell at a rate of 3.5 million bpd between March and July, equivalent to more than three percent of global oil demand, and are expected to continue declining until year-end.