Goldman Sachs Group Inc. issued a sterner warning about constraints in the global oil-refining market caused by wars in the Middle East and russia’s war against Ukraine, with the bank more than doubling its forecasts for diesel-production profits, UNN writes, citing Bloomberg.
An escalation in strikes on refineries in the Middle East and russia has further constrained already strained global refining capacity, pushing refining margins to new highs. Diesel fuel remains at the epicenter of the surge
Refinery outages are 60% above seasonal norms, while product inventories are falling despite some weakening in demand, they said. The profit from producing a barrel of diesel fuel relative to Brent next year will average $63 in the United States and $49 in the European Union, compared with previous forecasts of $27 and $19.
The world is facing a global fuel crisis, with prices for products including gasoline far outpacing the rise in oil prices. The situation could worsen after russia extended its ban on diesel-fuel exports through September, while demand is increasing in Brazil, the world’s second-largest importer. Meanwhile, the approach of winter in the Northern Hemisphere is expected to boost demand for heating fuel.
In the Middle East, although oil exports from the Persian Gulf have likely recovered to 70–80% of prewar levels, product shipments remain at only 40%, Goldman analysts said in an Aug. 28 note. "A full recovery in demand requires global geopolitical de-escalation," they added.
In futures markets, the price of Brent crude has risen nearly 50% this year and was last trading at around $91 a barrel amid a new flare-up in the Middle East. Meanwhile, futures for European gasoil have more than doubled.
Goldman Sachs has frequently highlighted strains in commodity markets in recent months, saying in March that the war between Iran and the United States was expected to have a much greater impact on fuel than on oil. Earlier this month, the company again emphasized the impact of Ukrainian strikes on Russia’s energy infrastructure, the publication writes.
Shell Plc Chief Executive Officer Wael Sawan said last week that the commodities market is tightening because of a "triple threat" posed by strikes on Russian refineries and risks to shipping in the Persian Gulf and the Red Sea. Meanwhile, TotalEnergies SE’s Patrick Pouyanné said that although some oil cargoes were passing through the Strait of Hormuz, no refined products were being shipped out.