Prices at the pump for diesel and other fuels are hitting fresh highs as the wars in the Middle East and Ukraine have not only choked off crude supplies but also damaged refineries, with the resulting capacity constraints increasingly being felt.
Iran’s blocking of the Strait of Hormuz shut in around 20 million barrels per day initially, but Saudi Arabia shifted some exports to the Red Sea, and some tankers resumed transits. Saudi exports via the Red Sea are now down as Yemen’s Houthi rebels have gained control of the Bab al-Mandab Strait.
Diesel prices have been setting fresh records in both Europe and the United States.
It is at a record average of $6.52 per gallon in the United States, according to the AAA automobile association. In France, it hit a record average of €2.41 per litre (around $10.40 a gallon) on Sunday, according to an AFP analysis.
“The current world energy crisis, then, is largely a crisis in petroleum products, refined from crude oil, rather than in petroleum itself,” Nobel Prize-winning economist Paul Krugman wrote in a recent post. “And its proximate cause is a global shortage of refining capacity.”
Read more here.
