Diesel crisis ignites a surge in oil prices? Hard

Recently, the problem of diesel shortages in Europe and the United States seems to be intensifying
.
Since the beginning of 2022, US distillate fuel oil inventories have been below the level of the 5-year low
.
In October 2022, the U.
S.
Energy Information Administration (EIA) calculated that the spot price of ultra-low sulfur diesel (ULSD) in the US New York Harbor was an average of $4.
36 per gallon, which is the highest monthly average price since May this year, showing the shortage
of diesel from the price scale.
Recently, EIA's weekly inventory report showed that there are only about 25 days of diesel supply stocks in the United States, and the market in the northeast region is very tight
.
Similar to the United States, the European diesel market has entered a state of
crisis.
Some market participants even said that the sky-high price of diesel in Europe may be coming
.
In this context, many commentators believe that the current diesel crisis in Europe and the United States will cause the rise in diesel and international oil prices together with the European embargo on Russian oil and the G7 price limit on Russian oil
.
However, the author believes that the current diesel crisis will not necessarily lead to an increase
in the price of crude oil and refined products.

Even from a phenomenal point of view, international oil prices have not risen
because of the rise in diesel prices.
As of Nov.
23, New York crude futures closed at $77.
94 a barrel, falling below the $80/barrel mark, and Brent crude futures also fell to $
85.
41 a barrel.
Talk of a diesel crisis spread back in October this year, and there is no sign
of its relief.
It can be said that in the past two months, the rise and fall of diesel prices and the rise and fall of crude oil prices have not been strongly correlated
.

The reason for the high price of diesel is that the current global oil companies are not expanding refining capacity under the tide of transformation, but leaving funds for renewable energy
.
This has led to a decline
in global refining capacity since 2020.
Subsequently, high demand and the Russian-Ukrainian conflict combined to raise the price of
diesel.
According to EIA, U.
S.
East Coast refineries were operating at 102.
5% in October 2022, and U.
S.
refineries are already operating at full capacity, and such supply is still unable to meet local demand
.
However, the high price of diesel has not affected the fundamentals of the US economy, and naturally it will not affect international oil prices
too much.