Goldman Sachs flags diesel shortage as top risk for oil markets
Goldman Sachs says diesel supplies are tightening sharply after refinery outages in Russia and the Middle East cut global output, leaving inventories below seasonal norms.
Global diesel supplies are tightening sharply, according to a note from Goldman Sachs analysts. The bank attributes the squeeze to refinery outages in Russia and the Middle East, which have reduced worldwide fuel output while increased production in the Americas and Africa has offset only about one-third of the loss.
In July, global refining throughput fell by up to 6.5 million barrels per day from a year earlier, driven by lower run rates in China and the Middle-East and Russian outages. Diesel exports are estimated to have dropped about 35% this month, roughly 2.6 million barrels per day, leaving inventories below the seasonal average and raising the risk of further market tightening.
Refining margins have remained at record levels even as crude oil prices rose above $100 a barrel, reflecting the tighter supply of gasoline, diesel and jet fuel.
"Refinery activity and product supplies have not picked up as much as crude deliveries, meaning that markets for refined oil products, including diesel and gasoline, are considerably tighter than those for crude," said Fatih Birol, executive director of the International Energy Agency.