October 2, 2023

Taylor Daily Press

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Saudi Arabia and Russia are teaming up to make refueling (and your shopping cart) more affordable

Saudi Arabia and Russia are teaming up to make refueling (and your shopping cart) more affordable

Not enough diesel is produced worldwide to meet demand. This immediately explains the significant price increases in our country and the rest of the West. The reason appears to be extended production cuts by Saudi Arabia and Russia.

Why is this important?

Diesel is the most important fuel in the industrial world. The material is used to power various types of vehicles and machinery, including trucks, trains, boats, construction equipment and tractors. When the price of diesel rises, it can lead to higher costs for various goods and services while increasing transportation and production costs. This could ultimately lead to price increases in almost every sector, such as food production, transportation, and the production of steel and other materials.

In the news: The world’s oil refineries are struggling to produce enough diesel fuel. This could reignite inflation in large parts of the world.

  • Since this week you have been paying again in Belgium So much for petrol and diesel. The price of a liter of 95 gasoline is now a maximum of 1.9180 euros per liter, while the price of 98 gasoline rises to 2.1390 ​​euros per liter. Diesel rises above €2 for the first time this year to €2.0270 per litre. Prices have also risen in other parts of Europe and the United States in recent months It increased dramatically.
  • We owe this mainly to Russia and Saudi Arabia. Saudi Arabia has been producing 1 million barrels per day less than usual since July, a measure that was supposed to be temporary but has already been extended several times. At the beginning of this month, it became clear that the country would continue to reduce production until the end of this year.
  • Russia also introduced an export cut of 300,000 barrels per day for September, which has now been extended until the end of 2023. This is in addition to the production cut of half a million barrels per day that the country announced in March and which will remain in effect until the end of December to remain.
  • The fact that these two countries are now reducing global supply mainly affects the diesel market. Toril Busoni, head of oil markets at the International Energy Agency, told the news agency Bloomberg Demand for diesel usually rises sharply during the last months of the year. According to the energy executive, refineries will have difficulty keeping up, which could cause shortages.
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Disproportionately large impact

Additional factor (1): Add to this the fact that diesel supplies in both the European Union and the United States Are less full than usualAnd you have a recipe for higher diesel prices in the long term. This is mainly due to heatwaves that hit the Northern Hemisphere this summer, which have sometimes forced refineries to shut down. There are fewer facilities operating anyway because some refineries Closed permanently After it was no longer profitable enough during the Covid period.

Additional factor (2): It is also important to note that the flow of oil from the Middle East has a disproportionately large impact on the diesel market. This is because the crude oil from this region is heavier, which allows for a greater proportion of distillates suitable for diesel.

Results: The fact that diesel is becoming more expensive isn’t just noticeable at the pump. Fuel is necessary to operate trucks, tractors and boats that transport basic goods such as food and medicine. When the price of diesel goes up, you’ll feel it in your shopping cart too. If the price stays high long enough, it could further complicate the already difficult battle against inflation. (do)

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