December 4, 2022

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Live news updates: Russia, Ukraine on the verge of agreeing to extend the grain deal

Live news updates: Russia, Ukraine on the verge of agreeing to extend the grain deal

© Reuters

The International Energy Agency has warned that global diesel markets are “exceptionally tight,” adding that European Union sanctions on Russian oil that come into full effect in the next three months will increase competition for limited supplies.

Diesel prices, the relative difference to the price of crude oil, rose to record levels in October and are now 70 percent and 425 percent higher, respectively, than a year ago, according to the International Energy Agency.

“High diesel prices are fueling inflation and adding pressure to the global economy and global oil demand,” the Paris-based International Energy Agency said.

He warned that once the EU ban on imports of diesel and other refined products from Russia was implemented in February, the market would tighten further.

“The competition for non-Russian diesel barrels will be fierce, with EU countries having to bid for shipments from the United States, the Middle East and India far from their traditional buyers,” she added. “Increasing refining capacity will eventually help ease diesel-related tensions. However, until then, if prices rise too much, further demand destruction may be inevitable to clear market imbalances.”

The International Energy Agency said diesel markets were already stressed before the Russian invasion of Ukraine due to the shutdown of 3.5 million barrels per day of refining capacity since the start of the Covid-19 pandemic. Disruptions in Russian shipments and a drop in Chinese exports have pushed supply further as demand for fuel – the main driver of economic growth – has rebounded this year.

She said high diesel prices, along with a weak Chinese economy, the energy crisis in Europe and a strong dollar, were “severely affecting” consumption. It added that global oil demand is expected to decline by 240,000 barrels per day in the fourth quarter compared to last year.

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