Some Diesel Analysts Are Warning of a Supply Crunch Nobody in Washington Is Talking About. Here Is What Holds Up, and What It Could Mean for Q4.

Some diesel analysts are warning of an imminent supply crunch that is largely overlooked by policymakers in Washington. The issue has to do with the diesel crack spread, which has never reached such record levels before. The crack spread is essentially the profit margin for refining crude oil into diesel fuel. When the gap between crude oil costs and diesel prices widens significantly, it signals a lack of finished diesel product, rather than a shortage of crude oil.

Experts say that the current crack spread of around $102 per barrel is unprecedented and indicates a serious supply problem, not just a fluctuation in crude prices. This is due to tight inventories, disrupted global supply chains, and geopolitical factors, such as Russia's ban on international diesel sales and Middle Eastern disruptions.

The problem is compounded by the fact that diesel inventories are at their lowest level since 1996, and supply is needed most during the peak heating season. Major Wall Street firms have also issued warnings about the diesel crunch, indicating that this is a serious issue that operators should pay attention to.