US Exports More Diesel as Global Shortage Fuels Competition

A diesel fuel tank at Jacobi Oil Service Inc. in Floyds Knobs, Ind.
A diesel fuel tank at Jacobi Oil Service Inc. in Floyds Knobs, Ind. (Luke Sharrett/Bloomberg News)

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The U.S. is exporting more diesel than it has in years as buyers in Europe and Latin America vie to secure supplies that have tightened since Russia’s invasion of Ukraine.

Waterborne diesel exports out of the U.S. Gulf Coast have climbed to 1.04 million barrels per day so far this month, on track to hit the highest level since August 2019, according to estimates from oil analytics firm Vortexa. Volumes to Europe have seen the biggest jump in the period to 84,700 barrels per day, on course for an eight-month high.

The overseas pull on diesel is straining U.S. stockpiles, which fell to their lowest level in eight years seasonally. Last week, in a rare reversal of trade flows, two diesel cargoes from New York sailed for Europe. Increased competition for U.S. diesel means American truckers and farmers must pay more to keep supplies at home, at a time when pump prices are back near historic highs set earlier this month.

Europe, which relied on Russia for about a fifth of its diesel imports in 2019, has been scrambling to find alternatives as concerns mount over the prospect of supplies running out. Meanwhile, buyers in Latin America, the preferred export destination for U.S. refiners in recent years, have had to pay more to remain competitive in international markets.

Petroecuador paid a hefty premium of $7.45 per barrel to U.S. Gulf coast prices for 1.96 million barrels of diesel, more than 80 times what it paid for the same product in December. This is on top of already-rich prices on the U.S. Gulf Coast, which are trading near their highest level since 2008 relative to Nymex futures.

Latin America has drawn around 700,000 barrels per day of diesel from the U.S. Gulf Coast so far this month, which would mark a three-month peak, Vortexa data show.

— With assistance from Sophie Caronello.

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