The diesel crisis in Europe is heating up, with parts of Europe starting to run out of diesel, Repsol Chief Executive Officer Josu Jon Imaz said on Thursday's earnings call.
"We are running out of middle distillates in some European countries," Imaz explained, adding that high diesel prices could be on the horizon.
Europe-a net importer of diesel, jet fuel, and heating oil-has struggled to maintain adequate inventories this year as high natural gas prices caused some users to switch to diesel, boosting demand, while some buyers have shunned Russian diesel--the source of half of Europe's diesel imports-as the block prepares itself for a ban on oil products at the end of this year.
For Europe's heavy industry, which relies on diesel, the situation is dire.
Diesel shortages are also spreading across the United States, with at least one energy company so far triggering an emergency protocol asking clients for a 72-hour advanced notice to be able to make good on diesel deliveries.
U.S. diesel fuel stocks have been on a steady decline for months, reaching the lowest level since 2008 as of October. The United States currently has just 25 days of diesel supply in reserve. In the United States, a lack of refining capacity and years and years of underinvestment in new capacity, combined with refinery closures and maintenance, have contributed to the current low supply situation.
Goldman Sachs has warned that the diesel shortage in Europe and the United States could increase fuel prices this winter.
The supply situation in the United States has caused traders to divert diesel and jet fuel shipments that were destined to service the European market back to the East Coast of the United States, ship tracking services cited by Reuters showed earlier this month, in what could shape up to be a global battle for middle distillates.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More