Global Diesel Supply Falls 8% as Russian Refinery Strikes, Middle East Disruptions Squeeze Markets

Global diesel supply has dropped approximately 8%, or roughly 2 million barrels per day, following simultaneous disruptions in Russia and the Middle East, said Andy Lipow, president of Lipow Oil Associates. Ukrainian drone strikes have taken 30% to 50% of Russia's 6.5-million-barrel-per-day refining capacity offline, including a large facility near Moscow. Lipow said repairs could take months or years given U.S. and European sanctions. In the Middle East, Houthi attacks shut Saudi Arabia's East-West Pipeline, now on day 11 of closure, and struck the 400,000-barrel-per-day Jizan refinery in late July. U.S. East Coast diesel inventories are at their lowest seasonal level since 1982. California diesel prices are near $8.50 a gallon, with WTI crude at $103 a barrel and diesel at an equivalent $270 a barrel. Lipow warned Northeast heating oil deliveries could approach $1,000 per 150 gallons.