Diesel fuel exports from the United States hit an all-time high last week, driven by shortages of the fuel in other parts of the world as a result of the energy crisis in the Middle East.
According to the Energy Information Administration, the United States exported diesel fuel at a rate of 1.9 million barrels daily last week, breaking the previous record, set in spring. However, the EIA data also showed that diesel fuel production fell last week—as did inventories of the fuel. They now sit 12% lower than the five-year average.
Most of the U.S. exports of diesel fuel are going to Europe, which is experiencing especially tight supply of fuels, not least due to the decline in local refineries as European governments pursue an energy transition plan that sees mass electrification of transport. So far, this has failed to materialize, despite a substantial increase in EV sales across the continent and especially in the EU.
Bloomberg noted in a report that U.S. diesel fuel exports have been running at rates of 1.5 million barrels daily for five weeks in a row before rising to the record high. Because refineries cannot produce more diesel at the moment, fuel sellers have been dipping into inventories. As a result, these are now at the lowest since 1996, Bloomberg reported.
This state of affairs could become problematic for the domestic U.S. market as heating season approaches. Diesel fuel is used for the production of heating oil that is used in parts of the country during the winter. Heating oil is also a winter favorite in other parts of the world, meaning demand for a commodity in already short supply is only going to jump in the coming months—while production declines as refineries enter maintenance season.
Maintenance season begins in August and lasts until October. While it can be delayed if need be, with refineries running at higher than usual rates at the moment, a delay would not be the wisest decision.
By Irina Slav for Oilprice.com
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