Overview
- Russia announced a temporary ban on diesel exports on July 8 after Ukrainian drone strikes disrupted its refineries and caused domestic shortages, removing a major source of diesel from world markets.
- Markets reacted immediately with U.S. diesel crack spreads climbing from just over $60 to more than $80 per barrel and diesel prices rising roughly 13–14%, pushing traders to raise odds of new crude highs.
- South Korea, which has about 3.2 million barrels per day of refining capacity and exported 188.01 million barrels of products in the first five months of the year with diesel making up 40.6 percent, is well placed to boost shipments to Asia and Europe.
- Shares of major Korean refiners jumped as investors priced in higher margins, and analysts say those firms could send more diesel abroad while trying to preserve domestic stocks.
- The supply gap could widen again if damaged Middle East refineries stay offline or shipping through the Strait of Hormuz is disrupted, which would keep prices volatile and raise costs for businesses and consumers.