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Shipping Fuel Shortage Looms as Refiners Prioritize Diesel
Developing
In Short: Refiners are prioritizing diesel production over fuel oil, leading to a potential shortage for the shipping industry, especially in Asia.
Shipping fuel oil supplies are tightening as refiners prioritize diesel production, according to reports. This shift is driven by record-low gasoline and diesel inventories, which incentivize refiners to maximize secondary unit runs with more fuel oil feedstock barrels, tightening fuel oil balances globally, particularly in Asia.
The situation is exacerbated by supply disruptions in the Middle East and Ukrainian drone attacks on Russian diesel production, which has led to a ban on diesel exports from Russia. Analysts predict that the shortage could worsen in the third quarter.
Rystad Energy analyst comments that fuel oil supply is expected to remain critically tight, with Asia set to suffer the most severe blow. The shortage was initially smaller, at just 6,000 barrels daily, but has since grown more acute.
Refiners have no immediate plans to change their priorities, making the fuel oil situation more precarious for the shipping industry and some power plants.
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- Shipping Fuel Shortage Looms as Refiners Prioritize Diesel What I Cover Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the… Supply of fuel oil for the shipping industry is getting squeezed by the war-driven tightness in diesel fuel, as refiners prioritize the latter over the former, Reuters has reported, with Asia set to suffer the most severe blow.
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Sources
- Crude Oil Prices Today | OilPrice.comlink