Saudi Pipeline Damage Piles Pressure on Diesel Prices
Diesel prices are expected to remain high into next year due to ongoing supply chain disruptions. A drone attack on Saudi Arabia's East-West oil pipeline has compounded the crisis, driving up prices over the past week.
The global shortage is squeezing markets and piling costs on drivers. Diesel crack spreads, a key measure of the margin available from turning crude oil into diesel, hit record levels last month, exceeding $100 a barrel.
Even before the latest disruption in Saudi Arabia, prices were expected to remain elevated throughout the Northern Hemisphere winter. Iman Nasseri, senior vice president at consultancy FGE NexantECA, said the market has been running short for months due to disruptions from the Iran war and global shipping through the Strait of Hormuz.
Saudi Arabia is seeking to repair its pipeline within days, but a longer outage could further tighten supplies. Nasseri warned that if Saudi Arabia is forced to choose between exporting crude or feeding refineries, 'then we're going to have a bigger problem.'