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U.S. diesel exports surge to record
Global scramble for diesel is increasingly draining U.S. supplies
Storage tanks at the Chevron refinery in Richmond, Calif. (David Paul Morris/Bloomberg)
Key Takeaways:
- The U.A. shipped a record amount of distillate fuel overseas last week as domestic stockpiles fell again, the latest sign that the global scramble for diesel is increasingly draining U.S. supplies.
- The global diesel shortage, driven by the U.S.-Iran war and Russian refinery disruptions, has increased demand for U.S. fuel exports.
- Five weeks of elevated exports reduced U.S. distillate inventories to their lowest seasonal level since 1996, raising concerns before heating season.
The U.S. shipped a record amount of distillate fuel overseas last week as domestic stockpiles fell again, the latest sign that the global scramble for diesel is increasingly draining U.S. supplies.
Exports of distillate fuel, a category that predominantly includes diesel as well as heating oil and other products, rose to 1.9 million barrels a day last week, according to data released Aug. 5 by the U.S. Energy Information Administration. That’s the largest number on record, eclipsing the earlier high-water mark set in May.
Global diesel markets were thrown into chaos at the start of the U.S.-Iran war, with cargoes of crude and refined products made from oil — such as jet fuel and diesel — unable to pass through the Strait of Hormuz. The strain has only grown after months of Ukrainian attacks on Russian refineries, limiting fuel production capacity and eventually prompting Moscow to impose a ban on most diesel exports.
That has left the U.S. as one of the world’s few producers of diesel with ample capacity to produce fuel and ship it abroad.
Exports in the last two weeks have most frequently gone to northwestern Europe, according to data from energy analytics company Vortexa Ltd. Europe is the “epicenter” of the global diesel crunch given its exposure to refinery outages in the Middle East and Russia.
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Earlier in July, shipments were most often pointing to the Caribbean, as well as South America, with importers stocking up ahead of the September planting season.
The new record capped off five weeks in a row with exports over 1.5 million barrels a day, drawing down the country’s fuel supplies even as refiners go all-out to produce diesel. Seasonally, distillate fuel stockpiles stood at the lowest since 1996 as of last week — raising questions about a market crunch as the fall approaches, when homes in the Northeast U.S. and around the world begin using heating oil to warm their homes.
