Global oil refining capacity faces increasing challenges in diesel fuel production. Due to increasing demand and supply shortage, the reserves of such fuels in the world are extremely low. This was reported by Bloomberg.
Cuts in oil production by OPEC+ leaders Saudi Arabia and Russia have worsened the situation, as such oil is mostly used to produce diesel fuel. On September 5, both countries announced they would extend production curbs until the end of the year, when diesel demand usually increases. The OPEC+ route will not allow a rapid increase in supply to the world market. This began to accelerate inflation, and a new acceleration was given to inflation as the economy began to experience difficulties in logistics and industry.
Hot summer weather in the Northern Hemisphere forced many refineries to operate slowly, leaving stocks critically low. Due to the pandemic, the market’s capacity is also insufficient. At the same time, demand for jet fuel and gasoline increased sharply after restrictions were lifted and is already approaching pre-pandemic levels. Last Thursday, diesel fuel futures in the US reached $140; This is an absolute record for this time of year. The publication notes that diesel prices in the EU increased by 60% in the same period.
Experts are increasingly concerned about the situation in the diesel fuel market. “We risk seeing continued tightness in the market, particularly for distillates, ahead of the winter months,” said Toril Bosoni of the International Energy Agency.
“Refiners are facing difficulties meeting demand,” said Callum Bruce of Goldman Sachs. According to him, they have to meet the rapidly increasing demand for jet fuel and gasoline, leaving aside diesel.
“The problem is more of a supply issue than a demand issue,” says Eugene Lindell of consulting firm FGE. He states that stocks in Europe are at critically low levels due to the problems experienced in refineries in the summer months, and that the diesel export plans of China and Russia are insufficient to compensate for the deficit.
At the end of the week, the Russian government took office. take into account Options for stabilizing fuel prices in the domestic market.
It was before From Oil price forecast for next week.