California Diesel Hits $7 Again as Wars Knock Out 8% of Global Supply
Updated
Updated · CNBC · Aug 18
California Diesel Hits $7 Again as Wars Knock Out 8% of Global Supply
3 articles · Updated · CNBC · Aug 18
Summary
$7-a-gallon diesel returned to California on Wednesday, up about 30 cents from a month ago and 37%—or $1.89—above a year earlier.
About 8% of fuel supply needed for 28 million barrels per day of global diesel demand has been disrupted by wars in Eastern Europe and the Middle East, with roughly 6 million bpd of refining capacity offline.
Russian export bans after Ukrainian drone strikes, 1.2 million bpd of Middle East export disruption, and the shutdown of Saudi Arabia's 200,000 bpd Jizan refinery have tightened supply further.
California faces steeper costs than the rest of the U.S.—where diesel averaged $5.50—because it relies more on imported crude, requires a special diesel blend, and layers on environmental rules and taxes.
Refiners are capturing windfall margins near $100 a barrel, while analysts say prices may not ease until Russian plants restart and Middle East exports recover, raising inflation risks ahead of harvest and holiday shipping.