Surge in Benchmark Diesel Price Reaches August Highs, Mirroring Global Oil Market Chaos
The benchmark diesel price, instrumental in fuel surcharges, has surged to its highest level since August, marking a significant one-week increase. The Department of Energy/Energy Information Administration (DOE/EIA) reported an 11.3-cent-per-gallon rise to $3.715, surpassing the August 5th mark of $3.755.
This increase follows a steep 21-cent gain on February 12th attributed to shipping attacks in the Red Sea. Since December 9th, the DOE/EIA price has witnessed a total rise of 25.7 cents per gallon.
Industry analysts attribute the recent diesel price surge to escalating oil prices, particularly ultra-low sulfur diesel (ULSD) on the CME commodity exchange. The sanctions imposed on Russian oil shipping by the Biden administration in January are believed to be driving up oil prices, which briefly receded before rebounding.
Energy economist Philip Verleger emphasizes that the sanctions set the stage for higher oil prices, while a Bloomberg article warns of severe disruptions in Russia's oil export industry. The International Energy Agency (IEA) anticipates potential tightening of crude and product balances due to the sanctions targeting Russian and Iranian producers and major tankers.
Industry estimates suggest that Russian crude flows into Asia may face disruptions of up to 1 million barrels per day. China and India are anticipated to be most affected by the sanctions, prompting them to seek alternative oil sources aggressively.