OPINION | Tight global fuel markets brace for possible Russian diesel export ban

Terrible timing

This threatened ban comes as global inventories of refined products have fallen to alarming levels, after being drawn down at a rapid pace in the past few months to compensate for missing Middle Eastern volumes.

In the US, distillate stocks, which include diesel and heating oil, are hovering just above a 23-year low of around 100 million barrels hit in May, according to Energy Information Administration data. Inventories elsewhere tell a similar story.

Diesel stocks in northwest Europe, a major diesel-importing region, have dropped by roughly 20 per cent since the start of the Iran war, according to Insights Global, leaving the region with little buffer against fresh supply shocks.

Moreover, the market is now entering a critical period when inventories are typically rebuilt ahead of winter in the Northern Hemisphere, when demand rises due to heating needs, freight activity and agriculture.