Global diesel fuel supply will remain tight into next year for lack of enough refining capacity to pick up the slack from Middle Eastern and Russian facilities, Reuters has reported, citing refining and commodity trading industry executives. "There's really a shortage of products because we're missing 2 million barrels a day from Russia, and we're missing nearly 2 million barrels a day from the Middle East," said Russell Hardy, chief executive of Vitol, speaking at the Asia-Pacific Petroleum Conference. "When you're looking forward to a winter season coming where diesel stocks are quite deficit, you're setting up for an environment where that strength could continue in those markets," said Mark Senn, Phillips 66’s senior vice president for global trading.
Diesel prices in the United States have broken records recently, topping $5.90 per gallon this month. Diesel—and other fuel—prices are soaring globally as the squeeze reaches end consumers, prompting governments to implement emergency relief measures such as fuel tax cuts. The problem is that lost supply is not returning soon.
As Vitol’s Hardy explained, fuel exports out of the Middle East are running at just 1 million barrels daily, prompting inventory draws with no immediate hope for replenishment. "We keep eating into the surplus that exists around the world, and we're pretty much at the bottom of our stockpiles," the commodity major’s CEO said, echoing remarks made by multiple industry executives and energy analysts over the past few months. Russia has a ban on diesel exports while repairing refinery damage from Ukrainian drone strikes and addressing a domestic fuel shortage.
Middle Eastern refiners face challenges in exporting fuels due to the Strait of Hormuz and ongoing refinery damage. Recently, Saudi Aramco’s Jizan refinery, with a capacity of 400,000 barrels daily, was attacked again by the Yemeni Houthis.
