The world’s oil refiners are proving powerless to make enough diesel, opening a new inflationary front and depriving economies of a fuel that powers industry and transport alike.
While oil futures are rocketing — on Friday they were just below $95 a barrel in London — the rally pales in comparison with the surge in diesel. U.S. prices jumped above $140 to the highest ever for this time of year on Thursday. Europe’s equivalent soared 60% since summer.
“We’re at risk of seeing continued tightness in the market, especially for distillates, coming into the winter months,” said Toril Bosoni, head of the oil market division at the International Energy Agency, referring to the category of fuel that includes diesel. “Refineries are struggling to keep up.”
There’s also been pressure on them to make other products instead like jet fuel and gasoline, where demand has rebounded hard, according to Callum Bruce, an analyst at Goldman Sachs Group Inc.
There’s still hope that the diesel crunch can ease. With cooler winter months approaching, the weather-related constraints on the refineries overall decrease — even if some of them will undergo routine seasonal maintenance.
Source of data and images: time