Diesel becoming more expensive due to lack of refining capacity

In the US, the diesel price on Friday rose above $6 per gallon for the first time ever. In the Netherlands too, the price rose sharply, although it did not yet exceed the recent peak from early April. The wars in both the Middle East and between Russia and Ukraine are increasing the shortage in the market for refined oil products. Diesel currently costs €198.05 per 100 liters from 4,000 liters (LTO member price). A week ago, the oil price approached $100 per barrel, but the very next day that level was broken. At the time of writing (Tuesday afternoon 15 September), Brent crude is quoted at $107.56 per barrel. The prices of oil futures and physical prices have risen, but according to the International Energy Agency (IEA) that increase is insignificant compared with that of refined products, where the shortage in the market is currently greatest. Diesel, almost 30% of global demand for oil products, cost 94% more in early September in America than before the war, the IEA reports. In Europe and Asia prices rose less sharply, but according to the IEA the increase is not far behind. The agency estimated total oil exports from the Gulf states in August at almost half the level before the war. However, exports of refined products and LPG remain almost 60%, or 3.7 million barrels per day, lower than in February. So refined products, especially diesel, are rising in price. Refineries have been hit in both the Middle East and Russia. Russia is normally, after the US, the largest diesel exporter in the world. According to the IEA, the Gulf region and Russia were still responsible in February (before the war in Iran) for 45% of global diesel trade. In Russia, an export ban applies until (at least) 30 September. Agricultural entrepreneurs hit twice Agricultural entrepreneurs are being hit twice by the high diesel prices. Not only does the machinery fleet run on the fuel, but also most trucks that handle the transport in and out of products. Higher fuel costs are passed on in transport costs, and the final products also come with a higher price tag. In addition, the gas price is also at a high level, which affects fertilizer prices. In the US, the diesel price on Friday rose above $6 per gallon for the first time ever. The diesel price in the country has risen by more than 55% since the war in Iran, while gasoline became 40% more expensive, CNN calculates. The shortage of refining capacity is driving up the diesel price. The oil infrastructure in the Middle East is under even more pressure. The East-West oil pipeline through which Saudi Arabia bypassed the Strait of Hormuz has been out of service since Friday after drone attacks. The equivalent of 4 million barrels of oil per day flowed through the 1,200-kilometer pipeline. It is unclear how long the repair will take. Estimates range from a few days to months. Houthi rebels have also become more active in the Red Sea near the Bab al-Mandeb strait, which served as an alternative route to the Strait of Hormuz. The risk to the latter strait also appears to be increasing. Both on Sunday and today, a ship was hit there. Global oil stock declines Global oil inventories fell by another 95 million barrels in August, according to the IEA's September report. The decline since February thus comes to 507 million barrels. As buffers shrink, the IEA says it is more necessary than ever to make progress in resolving the conflict in the Middle East and the Russian-Ukrainian war. Gas price The gas price is also higher than a week ago at €80.08 per MWh. A month ago (14 August), the price was considerably lower at €61.50 per MWh. On 2 January of this year, before the war in Iran, the price was 27.32. This means the gas price has risen by 193%. The fact that the wholesale market price for gas delivery in a few months' time is also high means, according to the Authority for Consumers & Markets (ACM), that traders do not expect prices to fall quickly in the coming period. Because a large share of electricity is generated in gas-fired power stations, the price of electricity rises along with the price of natural gas, the ACM said in its September energy monitor. The fill levels of both Europe and the Netherlands remain well below those of last year, at 68% and 53% respectively. Electricity price 14 September saw a substantial spike in the average daily electricity price on the Expex Spot, at €229.40 per MWh. The lowest daily average too, on 12 September, was relatively high at €137.34 per MWh.