Diesel and gasoline supply crunch sets off sharp rally in crude oil market

Diesel and gasoline supply crunch sets off sharp rally in crude oil market

Oil prices have renewed their rise in the most sustained ascent since Russia’s invasion of Ukraine as a fuel supply crunch adds pressure to a market that had already been disrupted by the coronavirus pandemic.

The disturbance to flows of oil and related products from Russia has rippled through energy markets as refineries are racing to pump out petroleum products to meet the needs of a global economy that is still emerging from the shock of Covid-19.

The supply and demand imbalances pushed the price of Brent crude, the global benchmark, up by more than 10 per cent last month in the biggest rise since January. Brent for July delivery hit a high of $123 on Tuesday compared with less than $80 at the start of this year.

The rise underscored persistent supply challenges in the market for refined products such as gasoline and diesel, which had been building even before Russia’s invasion of Ukraine in late February.

“The crude oil price is $120 per barrel but the product price — what you and I pay for petrol and diesel — is much, much higher. The overarching theme is the lack of investment,” said Amrita Sen, founding partner and chief oil analyst at Energy Aspects.

“We