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Market Chatter: Diesel Supply Tightens as Russia, Middle East Disruptions Lift European Prices

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Diesel buyers face shrinking supply as disruptions in Russia and the Middle East tighten markets, as European diesel prices hit $167 per barrel compared with $87/bbl a year ago, the Wall Street Journal reported Tuesday, citing OPIS data.

Russia has reduced refinery activity and curbed diesel shipments after repeated Ukrainian strikes, driving importers to compete with European buyers for supplies from the US and India. China also continues to hold back fuel exports as it weighs the risk of tighter domestic supplies, according to the report.

US refiners are taking advantage of unusually strong margins to push more fuel overseas, with distillate exports hitting a record 1.9 million barrels a day in early August, leaving domestic inventories with little cushion at a 30-year low for the period.

Harvest activity in the Northern Hemisphere could lift diesel use, while colder weather may boost heating demand as refineries enter seasonal maintenance and take some capacity offline. High prices may still struggle to curb diesel demand as trucking and farming rely on the fuel for essential operations.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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