The growing dependence on US diesel supplies could cause problems in the coming months as US domestic demand for fuel rises while production fails to grow at the same rate. Sooner or later someone will be left without.
Bloomberg reports that the US is exporting diesel at record rates, hitting 1.4 million bpd in July, a five-year high, according to Vortexa data.
US diesel shipments are mainly destined for Brazil, Mexico, Chile and Argentina, but now also to Europe. Brazil, one of the BRICS, therefore finds itself dependent on the US, despite everything.
Much of the increase comes from Europe, which is trying to replace Russian volumes with US volumes due to the Ukrainian crisis and the oil and fuel embargo that will come into effect towards the end of the year.
The Bloomberg report quoted the chief operating officer of Valero Energy as saying during a conference call last week that supplying Europe with enough diesel will be a challenge due to the tight supply situation.
Another challenge would be increasing domestic demand as the harvest begins in the Midwest. The harvest season will also begin soon in Brazil, a major buyer of US diesel.
U.S. diesel inventories have been declining for much of this year as fuel demand continued to recover from the pandemic faster than supply. The latest data from the Energy Information Administration showed another drop in inventories in the week to July 22, amounting to 800,000 bpd. Compared to the decline of 1.3 million barrels in the previous week.
The production of middle distillates, including diesel, has meanwhile been around 5 million barrels per day. According to Bloomberg, a diesel shortage is already looming on the east coast. According to media reports, seasonal stocks of spirits are at an all-time low since May. Already last winter the East Coast suffered from a shortage of diesel and, if the situation continues to evolve as it does, it could repeat itself. If there were to be an accident at some large refinery it would be a big deal.
The article The world increasingly dependent on US diesel, which is increasingly scarce, comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/il-mondo-sempre-piu-dipendente-dal-gasolio-usa-che-e-sempre-piu-scarso/ on Wed, 03 Aug 2022 17:08:00 +0000.