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Gasoline Could Face Supply Crunch, Oil Trader Vitol Warns
Refiners Skew Output Toward Diesel, Jet Fuel
Key Takeaways:
- Vitol warned gasoline could face significant supply pressure as the Iran war disrupts energy markets and shifts refining priorities.
- Refiners are prioritizing diesel and jet fuel output, reducing gasoline production as inventories fall below seasonal norms ahead of peak summer demand, the trader said.
- Rising travel demand is expected to intensify competition between jet fuel and gasoline supplies in the coming months, potentially tightening markets further.
Gasoline could be the next petroleum product to come under intense supply pressure as the Iran war rumbles on, according to oil trading giant Vitol Group.
So far, the Middle East upheaval has impacted diesel and jet fuel prices more, as the region’s refiners played a prominent role in those markets before the conflict choked exports through the Strait of Hormuz.
But, with oil refiners in the U.S. and elsewhere responding by skewing their output toward those two fuels, they inevitably produce less of other petroleum products, including gasoline.
“The problem had to end up somewhere,” said Bader Nooruddin, regional head of research at Vitol Bahrain, speaking at S&P Global’s Middle East Petroleum & Gas Conference in London. “Gasoline could be the next product to get impacted.”
Gasoline supplies are already showing signs of strain. Inventories in the U.S. — and globally, Nooruddin said — are well below seasonal norms. The northern hemisphere summer holiday season is set to put more pressure on both jet fuel and gasoline supplies.
That potentially sets up a battle for supply between the two fuels this summer.
