Disruptions on the world’s major trade routes, refinery closures and resurgent demand are pushing up global fuel prices and making forecasts difficult in the run-up to a US presidential election in which inflation will be a key issue.
Increases in the two most-consumed fuels are outpacing those for crude oil in some of the world’s most important markets. US gasoline futures have jumped sharply in recent weeks and are now up by more than a fifth so far this year, while diesel in Europe has risen 10%. Refiner profits are also above seasonal norms in many regions, a sign of tightness as the peak summer travel period approaches.
Interruptions to fuel production — a combination of scheduled work, unplanned outages and drone attacks on Russian facilities — have been lifting prices. They’ve come on top of higher shipping costs caused by Houthi attacks in the Red Sea and drought at the Panama Canal, as well as the supply-chain ructions spurred by Western sanctions on the Kremlin.
And while more than a million barrels-a-day of new refining capacity is set to come online this year, these projects are notoriously prone to delays. The various moving parts are making it tough to forecast how much fuel will be available in a year where global oil demand is set to break another record and voters in the world’s largest economy will head to the polls.
There’s a risk that premium gasoline prices could reach a multi-year high this year, said Mukesh Sahdev, head of oil trading and downstream research at Rystad Energy AS.
