On Monday, oil prices rose, pushed by Europe’s growing demand for diesel amid Russian sanctions and shipping interruptions.
In the US, refinery production was down due to maintenance, squeezing supply further.
Brent oil futures rose by $0.91 to $82.53 per barrel, while West Texas Intermediate (WTI) futures gained $1.09, reaching $77.58.
Analysts are watching this fuel closely. “Diesel is the focus,” said John Kilduff from Again Capital LLC.
North American refinery slowdowns and global trade issues have reduced diesel availability, affecting US exports to Europe.
US diesel cracks reached a four-month peak, over $48 per barrel, making European shipments less profitable.
Meanwhile, Houthi rebels’ near-miss on a US-flagged tanker escalated security worries, highlighting the market’s vulnerabilities.
Europe is navigating its first winter without Russian diesel due to an EU ban. Before the Ukraine conflict, Europe heavily depended on Russian deliveries.
By October 2023, however, Russian imports plummeted, forcing Europe to seek other sources.
Europe has turned to the Middle East, US Gulf Coast, and India for diesel. These sources have raised concerns about diesel quality during winter.
Despite these challenges and Russia’s temporary export halt, prices in Europe remain high.
European refiners have struggled to increase diesel inventories despite producing more diesel.
Stocks in key hubs like Amsterdam-Rotterdam-Antwerp remain low, indicating ongoing supply and demand challenges.
In summary, reduced North American diesel production, trade issues, and geopolitical tensions have tightened diesel supplies.
This affects the US-Europe trade, underlining the complexity of global energy markets amid changing and uncertain times.
The situation affects energy prices, supply security, and geopolitical tensions, underscoring global market interconnectedness and the significance of energy policies.