Diesel, very important.
From Reuters, March 10:
Surging diesel prices are threatening to slow global economic activity as the war in the Middle East pressures supplies of both the industrial fuel and the type of crude oil most suited to produce it, traders and analysts said.
Diesel has been in tight supply for years due to disruptions from Ukrainian attacks on Russian refineries and Western sanctions on Moscow's exports. The Israel-U.S. war with Iran worsens supply worries as Tehran has been disrupting shipping in the Strait of Hormuz, through which between 10% and 20% of global seaborne diesel supplies flow.
"Diesel is the most exposed product to this conflict structurally," Shohruh Zukhritdinov, founder of Dubai-based Nitrol Trading, said. "Diesel underpins freight, agriculture, mining and industrial activity, making it the most macro-sensitive barrel in the system."
The diesel supply loss associated with the Strait of Hormuz disruptions is about 3 to 4 million barrels per day, or roughly 5% to 12% of total global consumption, energy economist Philip Verleger estimated. Another 500,000 bpd of diesel will be lost due to blocked exports from Middle East refiners, he added.
"By shutting the Strait (of Hormuz) Iran has cut the exports of distillate-rich Middle Eastern crude, jet fuel, and diesel. There is a term for this in chess: CHECK," he said.
As a result, diesel prices have risen much faster since the start of the Middle East war compared to oil and gasoline, and could roughly double at the retail level if the Strait of Hormuz is closed for a prolonged time, Verleger said.
U.S. diesel futures had gained more than $28 per barrel from February 27 to March 10, compared with an over $16 per barrel rise in U.S. crude oil futures.
Similar moves have been registered in Asian trading hub Singapore and European hub Amsterdam-Rotterdam-Antwerp, resulting in higher diesel margins across the globe.
ECONOMIC ACTIVITY SET TO SUFFER....
....MUCH MORE
Recently:
March 2 - Fuel: More On Saudi Arabia's Giant Ras Tanura Refinery
March 5 - Diesel Prices Are Rising Fast
March 8 - Diesel equals Soybeans; Soybeans equal Diesel (in more ways than one) reprised
