According to Insights Global, a Dutch consulting company, at the beginning of February, stocks of diesel fuel and fuel oil in storage in the European refining and storage area Amsterdam-Rotterdam-Antwerp (ARA) were at their lowest for this season since 2008.
Although the shortage is beginning to show most clearly in Europe, it is not regional. In Singapore, stocks of middle distillates have also fallen to a multi-year minimum. China sharply restricted export of petroleum products, including diesel fuel, back in the first decade of January, which could not affect the entire Southeast Asian market.
Among the reasons for this situation analysts mention the following:
- the shale revolution, which led to the reduction of fuel and fuel oil in the market (no heavy petroleum products are made from shale oil);
- sanctions against Venezuela and Iran, which further reduced heavy oil production;
- an overall green agenda, under which capital investment in exploration and development of new hydrocarbon deposits has decreased drastically;
- weak recovery of the air transportation market (the output of diesel fuel is technologically related to the output of jet aviation fuel, and today it is not profitable for oil refiners to increase the production of aviation fuel).
Reuters estimated that diesel fuel prices in Northwest Europe reached $114 per barrel in early February, the highest since September 2014. At the same time, the price difference against crude oil reached a two-year maximum. Simultaneously, diesel fuel prices have also reached a maximum since September 2014 in Asia.
It is worth adding that most analysts still expect a further increase in the cost of oil, which, given the shortage of supply, will further boost diesel fuel prices.