Trump's Ukraine energy truce won't fix global diesel crunch
AN energy infrastructure truce that United States President Donald Trump brokered between Russia and Ukraine could reduce one of the biggest immediate threats facing the global diesel market. But it is unlikely to reverse the severe supply crunch that has emerged this year.
U.S. President Donald Trump's recent energy infrastructure truce between Russia and Ukraine aims to mitigate the global diesel crunch. However, experts believe this won't be enough to reverse the severe supply shortage. Ukrainian President Volodymyr Zelenskyy expressed reluctance to halt strikes until more details were provided.
Even if the truce holds, the global refining industry and diesel markets remain caught between two major conflicts. Russia's years-long Ukrainian drone campaign targeting energy installations has crippled its refining industry, with an average of one refinery hit every three days in the first eight months of the year. In the Middle East, Iran's war led to several refinery damages, cutting fuel exports and accounting for a fifth of global seaborne diesel exports.
Combined, net diesel exports from Russia and the Gulf were 1.6 million barrels lower last month compared to February. Russia and the Gulf together account for around 30% of global oil demand, with diesel being the lifeblood of the global economy. In Europe, diesel fuels about four in ten passenger cars. The sharp drop in supplies pushed diesel prices to record highs, with U.S. retail diesel reaching above $6 a gallon.
Despite the truce's potential to ease pressure on diesel markets, the crisis is more than just a supply disruption; it's about damaged refining capacity. Restoring millions of barrels of lost refining capacity will be a slow and complex process, especially as the Middle East remains at risk from the expansion of the U.S.-Iran conflict.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
