Strong overseas demand and tight supplies have made diesel the most profitable major refined product for US refiners, while global supply disruptions have surged US diesel prices, S&P Global said in an analysis published Monday.
Benchmark US Gulf Coast ultra-low sulfur diesel prices have risen by more than $2.10 per gallon, or 77%, since the start of the Iran war nearly seven months ago. Benchmark prices registered four record highs in September alone, including an all-time high of $5.18/gal on Sept. 15.
Prices recently spiked after Russia decided to extend diesel export restrictions through October to stabilize its domestic fuel market after Ukrainian strikes disrupted refineries. "Those disruptions have increased demand for US barrels and created profitable export arbitrage opportunities. At the same time, low domestic inventories have added upward pressure to prices," the analysis said.
As per US Energy Information Administration data published on Sept. 16, US ULSD inventories stood at 97 million barrels, compared to the five-year average of 113 million barrels. Meanwhile, refiners have increased domestic output to 5.036 million b/d, which compares to the five-year average of 4.615 million b/d.
Most of the additional supply is being exported, with September US ULSD exports averaging 1.635 million b/d and on track to exceed August's record, S&P Global Commodities at Sea data showed.