The price of Canada’s synthetic crude, which has rich diesel yield for refiners, has surged by nearly 200% since March 27 as the Middle East war cripples global diesel supply and sends diesel futures, cracks, and retail prices soaring.
The synthetic crude made from processing of bitumen from Alberta’s oil sands is very low sulfur and its chemical content makes it highly suitable for processing into jet fuel and diesel—the most stressed barrels amid the worst disruption to supply in the history of the oil market.
Canada’s synthetic crude is now priced at $19.25 per barrel over the monthly average for the U.S. benchmark crude, West Texas Intermediate, per data from Modern Commodities cited by Bloomberg.
The price has nearly tripled since March 27, per Bloomberg’s estimates.
Before the war in the Middle East began, the synthetic crude was trading at a $0.85 per barrel discount to WTI Crude, according to the data.
Since the Iran war choked crude and fuel supply from the Middle East and forced Asian refiners to cut rates and Asian countries to limit fuel exports, diesel and jet fuel prices have soared. And so have the prices for the crudes with the best diesel and aviation fuel yields, such as Canada’s synthetic crude.
Fatih Birol, the executive director of the International Energy Agency (IEA), this week noted that jet fuel and diesel are the most stressed barrels in global markets.
“The biggest problem today is the lack of jet fuel and diesel; these are the main challenges and we are seeing it already in Asia, but soon, in April, or maybe beginning of May, it will come to Europe,” Birol said this week on the ‘In Good Company’ podcast hosted by Nicolai Tangen, the CEO of Norway’s sovereign wealth fund, the world’s biggest.
In Europe, diesel futures surged this week to over $200 per barrel—the highest level since 2022.
In the U.S., the retail price of diesel could hit a record-high soon, analysts say.
“I’d currently estimate that diesel prices in the US have a 85% chance of setting a new record high in the next ~2 weeks,” Patrick De Haan, head of petroleum analysis at GasBuddy, said on Thursday.
By Tsvetana Paraskova for Oilprice.com
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