Diesel prices in the United States continued their continuous decline since the beginning of this year (2023), to record levels lower than the numbers recorded before the Russian-Ukrainian war.
Low-sulphur diesel futures prices have been in continuous decline since January 2023, through May 2023, when the average price fell $0.50 a gallon below February 2022 levels, according to data released Tuesday (June 20, 2023). About the US Energy Information Administration.
Russia’s massive invasion of Ukraine and the sanctions imposed on Moscow have disrupted markets for crude oil and petroleum products globally, contributing to higher diesel prices in the United States and Europe.
Diesel is produced from the refining of crude oil, which makes its prices closely and directly linked to the ups and downs of crude oil prices, according to what was monitored by the Energy Research Unit.
Diesel prices in the United States and the world rose at a rapid pace in the spring of 2022, due to concerns about a global diesel supply shortage after the imposition of sanctions on Russia.
Diesel prices in the United States in 2022
The prospect of lower Russian oil exports over the past year has pushed crude prices to their highest levels since 2014, pushing diesel prices in the United States to record levels of $4.3 a gallon in June 2022.
Despite the decline in crude oil prices in the second half of 2022, diesel futures prices in the United States rebounded again in October 2022, to $3.95 a gallon due to increased seasonal demand and concerns about diesel supplies in Europe.
The demand for diesel increases in the United States and Europe every fall, as preparation for the winter heating season begins, which affects the upward movement of oil derivatives prices.
The European Union’s announcement – in June 2022 – to impose a ban on imports of petroleum products from Russia, starting from February 5, 2023, contributed to the return of diesel prices in the United States to the rise during October 2022.
High diesel exports from the Middle East
Russia was historically the largest supplier of diesel to Europe, but the old continent succeeded in searching for alternatives from other regions that were replaced by most of the Russian exports, which contributed to the decline in diesel prices at the level of Europe and America.
Average European imports of Russian diesel have fallen by 96% to 24,000 bpd, since the European embargo took effect in February 2023, compared to the average 630,000 bpd Moscow sent to Europe in 2022.
On the other hand, diesel exports from the Middle East to Europe increased by 51% from February to May 2023, to record 160,000 barrels per day, according to data monitored by the Energy Research Unit.
Diesel exports from Asia to Europe increased during the same period by 97% to record 147 thousand barrels per day, in addition to an increase in European imports from North America by about 56% to 47 thousand barrels per day.
The prices of US oil derivatives were affected by the high prices of diesel in Europe, given that diesel is a globally traded commodity, although most of the US distillate exports go to Latin America and not to Europe.
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