diesel

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Diesel Markets The Good, the Bad and the Ugly: is the Cavalry coming?
Mattias Demets, Commodity Strategist, BNP Paribas Wealth Management
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Key Messages

  1.  The US-Iran war-induced energy shock has turned into a refined products shock. The premium for a refined product, such as diesel, is now nearly as high as the price of crude oil itself. 
  2. The Good. Europe still has close to 390 million barrels of diesel inventories, more than 60 days of final demand. This volume far exceeds that of the US or Asia. 
  3. The Bad. Net exports of refined products from the Middle East remain well below 50% of pre-war levels. Moreover, net gasoil exports from the Middle East and Russia have dropped by 1.3 million barrels per day from a year ago. 
  4. The Ugly. The cost to ship crude from the Middle East to Asia has increased tenfold since the start of the US-Iran war, squeezing refinery margins outside the Gulf and threatening global diesel supply. 
  5. The Cavalry? The International Energy Agency pledged on 15 October to exceed the volume of oil stock releases agreed in March. They confirmed that over 20 million barrels of diesel would be released as soon as possible.