Record fuel costs driven by refining crunch, says Saudi energy minister

Record fuel costs driven by refining crunch, says Saudi energy minister

Bloomberg / Riyadh

Saudi Arabia’s top oil official said that a refining crunch - rather than any shortage of crude - is driving the surge in fuel costs to unprecedented levels.

“The bottleneck has now to do with refining,” Saudi Energy Minister Prince Abdulaziz bin Salman said in an interview. “I did warn this was coming back in October. Many refineries in the world, especially in Europe and the US, have closed over the last few years. The world is running out of energy capacity at all levels.”

The processing crunch - previously outlined by the Prince at the CERAWeek conference in India last October - is buoying prices above $100 a barrel even as markets are well-supplied with crude, he added.

Tumult across fuel markets is widely evident. Gasoline futures climbed to a record of 389.98 cents a gallon on Friday, with prices at the pump already at unprecedented levels, while diesel still commands a premium after spiking in recent months. The surge is compounding inflationary pressures that threaten the economy recovery and worsening the cost-of-living crisis suffered by consumers. Nonetheless, the Organisation of Petroleum Exporting Countries (Opec) and its partners has stuck to schedule of modest supply increases, rubber-stamping