Diesel prices surged on Monday by nearly 20 percent, reaching the highest level in two years due to disruptions in the transit of energy supplies from the Middle East through the Hormuz Strait.
Low-sulfur diesel with a delivery date in March was priced at $877.25 per barrel this morning at the opening of the Intercontinental Exchange (ICE), which is 17 percent higher than the closing price at the end of last week.
By noon, its price was up by 19.2 percent, amounting to $897.5.
Fuel prices were catapulted at the beginning of the week by a halt in the transit of energy supplies through the Hormuz Strait following Saturday’s U.S.-Israeli attack on Iran. Tehran retaliated with attacks on targets in Israel and on U.S. bases in countries along the Persian Gulf, including the United Arab Emirates, Qatar, Kuwait, and Bahrain.
Iran currently does not plan to close the Hormuz Strait, Foreign Minister Abbas Araqchi said in an interview with Al Jazeera on Sunday. However, shippers have halted deliveries due to reports of damage to several tankers in the region, and a group of insurers reported that they would no longer cover war risk from the middle of the week.
Diesel will be under “the most acute physical pressure” in the near future, quotes the portal Oilprice.com, citing the words of Kpler analyst Amene Bakr, as it is the main fuel for military logistics, comes from only a few regions, and is the oil product that is hardest to replace in the short term with shipments from other sources, she explains.
The conflict will significantly impact diesel prices as limited short-term alternatives make the risk of diesel supply even more acute than the risks for crude oil, jet fuel, and liquefied natural gas supply.
The immediate impact on jet fuel and crude oil supply will be large, while the impact on diesel supply will be “very large,” estimates the specialized firm, although its share in deliveries in transit through the Hormuz Strait is the smallest, they estimate at Kpler.
Kpler’s analysis showed that a total of 10.3 percent of global maritime trade in diesel passes through the strait. The share of jet fuel is 19.4 percent, while gasoline and oil account for 16 percent.
