Global Diesel Crunch Worsens Ahead of Peak Winter Demand
As peace in the Persian Gulf remains elusive and Ukrainian drones keep raining on Russian refineries, a global fuel crisis is looming larger by the day as demand is set to increase in the coming months, especially for diesel. Shortages are already reality in some parts of the world. In Southeast Asia, Reuters reported last week, palm oil farmers are seeing diesel supply shortages and spiking…
The global diesel shortage is intensifying ahead of the winter demand peak, according to recent reports. In Southeast Asia, palm oil farmers are facing diesel supply shortages and skyrocketing prices. In the United States, diesel fuel exports reached an all-time high in early August, averaging 1.9 million barrels per day. Russia, the world's second-largest diesel exporter, has halted exports to address the local supply disruption caused by Ukrainian drone attacks on refineries.
The European Union, already vulnerable due to the closure of 30 refineries between 2009 and 2024 and an additional 400,000 barrels daily of capacity set for closure in 2025, now faces increased competition from Brazil and Turkey, previously relying on Russian diesel fuel. The European Union's reliance on U.S. barrels, which have been at record levels for five weeks, is concerning as refineries cannot produce more diesel.
This situation is expected to worsen, with prices already up 40% in Europe since mid-June, while crude oil prices have only risen by 5% over the same period. The European gas stocks are also lower than the seasonal average, raising concerns about potential shortages during the winter.
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