The global market for diesel, the fuel that powers much of the economy, has never been under so much pressure. Wars in the Middle East and Ukraine have created a perfect storm, blocking shipments from regions that normally supply almost a third of the world’s diesel exports. The crunch has sent prices surging in the U.S. and around the world, squeezing businesses, farmers and households.
That has prompted the Trump administration to consider restrictions or an outright ban on exports to curb prices. But U.S. export limits would have a potentially catastrophic impact on global supplies, analysts warn. Before the Iran war, the Middle East was the world’s top exporter of diesel, accounting for 19% of global exports last year, according to commodities-tracking service Kpler. North America had a 15% market share and Russia was the third biggest supplier at 11%.
Diesel shipments from Persian Gulf countries were at just a quarter of their prewar levels in August. Attacks by the Houthis on Saudi Arabia’s Red Sea refineries also hit exports. Meanwhile, Ukraine’s increasingly destructive attacks on Russian refineries have prompted the Kremlin to restrict exports sharply. By August, Russia’s diesel exports had plunged to about 20% of their May level.
In the U.S., prices hit an all-time high of $6.52 a gallon last week. They’re at $6.39 currently, up around 70% since the start of the Iran war. A U.S. ban might lower prices temporarily, but could raise prices of all fuels and cause shortages abroad, especially in Latin America and Asia.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing