Diesel 'crack spread' filling refiners' coffers as conflict cuts margins
The "crack spread", or profit margin, on diesel is increasing as refiners capitalise on the Middle East conflict, and it's hurting the slim margins of Australia's farmers.
A conflict in the Middle East is driving up diesel prices, which in turn are hurting agricultural businesses and increasing inflation, according to industry experts. Diesel prices have soared to well above pre-war levels and are unlikely to decline anytime soon. Farmers like Adrian Roles in regional New South Wales are feeling the pinch as the price of diesel, pesticides, and shipping costs have all risen.
The war has disrupted the Strait of Hormuz, leaving the world scrambling for diesel and causing the global shortage to worsen. Refiners are benefiting from the situation, with the price spread per barrel nearly tripling from around $24 to $69. Australia is particularly vulnerable as it relies heavily on imports for diesel. The conflict is also impacting the cost of fertilizers and pesticides, which are made from petrochemicals.
Higher fuel costs are being passed down the supply chain, causing strains on cash flow for businesses. Transport companies are now updating their fuel surcharges weekly due to volatile fuel pricing. The Middle East crisis is seen as a major unknown in the global economy, with inflation already above the central bank's target range. Regional areas are more exposed to the shock of higher prices, leading to ongoing economic pain.
Written by urgent.news from ABC News AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
