US supplies of diesel have fallen to the lowest seasonal level ever, threatening to push prices even higher for the global economy’s workhorse fuel just as heating and agricultural seasons kick into gear.
Stocks of distillate fuel oil – a category of fuels that most prominently includes diesel – stood at 103.4 million barrels in the week ending Aug 21, according to data released on Aug 26 by the Energy Information Administration.
Stockpiles have never been that low at this time of year, according to data stretching back to the early 1980s.
Global diesel demand typically crests around October as the beginning of winter heating season and harvests in the Northern Hemisphere meets planting season in the Southern Hemisphere.
Increasing demand for the the fuel amid precariously low stockpiles could push prices even higher and stoke energy-driven inflation.
The war in Iran roiled energy markets, but crude flows have proven more resilient than refined products, with exports of refined fuels through the Strait of Hormuz reduced to almost nothing.
Compounding the problem: Russia’s suspension of diesel exports amid Ukrainian drone attacks on its refineries.
Moscow is considering extending the export ban for another month, squeezing trade partners even further.
Retail diesel prices in the US are already above US$5.60 a gallon, near the highest they have been since the beginning of the US-Iran war and fewer than 20 cents off the all-time record set in 2022.
Meanwhile, US gasoline prices have remained stubbornly above US$4 a gallon.
US refiner margins for making diesel have surged to records in recent weeks, indicating the outsized global demand for US-produced fuel.
US exports of the fuel have touched extraordinarily high levels, but the supplies are far from enough to make up for the balance of lost product. BLOOMBERG
