Diesel prices are surging putting further pressure on Europe
Trucks, farms and industry are powered with diesel. Now prices are soaring due to refinery disruptions, supply shortages and geopolitical tensions. A potential US export ban could make Europe's diesel crunch even worse.
Diesel prices are soaring, placing additional strain on Europe's economy. While diesel is primarily used for industrial and agricultural purposes, its price surge has broader economic implications. Diesel shortages or price hikes can lead to increased costs for transporting goods and operating heavy machinery, ultimately trickling down to consumers and exacerbating inflation and the cost-of-living crisis.
The main driver behind the global increase in diesel prices is the US, which is the world's largest exporter of diesel. In the US, diesel prices have risen from an average of $3.74 per gallon two years ago to $6.52 (€5.73) currently. Russian diesel production has plummeted by nearly 30% since 2022 due to attacks on oil refineries, leading to a restriction on Russian exports.
The US is attempting to compensate for the shortfall but may be too late, and President Trump is considering a diesel export ban. This move could have negative consequences, as energy prices and affordability are becoming significant election issues. For Europe, higher diesel prices could be particularly detrimental due to its reliance on diesel-powered vehicles, with over 38% of passenger cars in the EU being diesel.
EU drivers are currently paying an additional €30 per 50-liter tank of diesel, while German long-haul truck drivers are shelling out an extra €236 per week. The EU economy has seen additional costs of €40 billion from road diesel since the start of the conflict. The primary constraint now is a lack of refining capacity rather than crude oil production, as refinery disruptions are occurring faster than they can be replaced.
The Strait of Hormuz is a long-term structural risk for diesel prices in Europe and other global regions. US export restrictions could further aggravate the situation, leading to even higher diesel prices and a potential trade-off between the US and EU. Winter is approaching, and refineries may struggle to meet demand for both heating oil and diesel, tightening supplies even further.
Written by urgent.news from DW English (Business)'s reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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