All articles tagged with #refining
President Donald Trump is seriously considering a ban on U.S. diesel exports to address record-high prices, but industry leaders and analysts warn the move could backfire by raising gasoline costs and worsening global supply shortages.
Europe is entering the fourth quarter with a severe jet fuel shortage, projected at 510,000 barrels per day, following the loss of Middle Eastern supplies. Inventories at the Amsterdam-Rotterdam-Antwerp hub have hit seven-year lows, forcing airlines to rely on distant suppliers like South Korea and Nigeria. While the U.S. and Asia-Pacific maintain surpluses, European prices have surged, with diesel up 40% year-to-date, threatening to further inflate energy costs across the continent.
Chevron CEO Mike Wirth argues that global strategic oil reserves are exhausted, leaving markets vulnerable to shocks. To capitalize on this, Chevron is investing $7 billion to double output in Venezuela by the early 2020s, funded entirely by existing joint venture cash. This move coincides with record-high diesel crack spreads and rising Brent crude prices, reflecting a market where supply constraints are driving costs higher despite resilient demand.
The White House is considering invoking the Defense Production Act (DPA) to expand U.S. refining capacity, but experts argue this approach will not quickly lower gas prices. U.S. refineries are currently running at 98% utilization, with diesel prices exceeding $6 per gallon for the first time. While the administration aims to boost output, industry leaders note that building new facilities takes years, and expanding existing plants is the only viable short-term option.
US fuel prices have surged to record highs as the ongoing Iran war and Russian export bans tighten global supply. Diesel now costs over $5.90 per gallon, while gasoline averages $4.15. Consumers face an extra $100 billion in energy costs since the conflict began. Hedge funds have shifted to bullish positions, betting on sustained scarcity, while refinery maintenance season threatens to worsen the shortage.
A global shortage of heavy fuel oil and diesel is driven by the US-Israel war on Iran, the Russia-Ukraine conflict, and refiners prioritizing high-margin products. This scarcity is driving up shipping costs and consumer fuel prices, with no immediate relief expected.
US gasoline prices are set to hit a record high of $4.03 per gallon for Labor Day, surpassing the 2012 peak. While the administration cites future oil deals and market forecasts for relief, analysts note that current refining capacity and geopolitical tensions in the Middle East limit immediate options. Diesel prices have also reached all-time highs, impacting broader economic costs.
The White House is pushing private investment to reopen mothballed U.S. refineries—from California to St. Croix—by coordinating with the National Energy Dominance Council and easing regulatory hurdles, with potential backers like the Freedom Fuel Network eyeing a Pentagon jet-fuel contract; a restart at St. Croix is estimated at about $686 million to reach 180,000 barrels per day, aiming to bolster domestic refining capacity and curb fuel prices, despite past environmental and permitting challenges at the site.
Despite ample crude supply, the global risk now lies in refining capacity for fuels like gasoline. War-related damage to refineries, strikes, and production shifts have constrained processing, with global refineries output about 8.4 million barrels per day below prewar levels. China’s reduced refinery activity, U.S. and Russia energy moves, and ongoing Hormuz traffic disruptions mean gasoline and diesel shortages persist even as crude can flow to where it’s needed, keeping fuel prices higher for longer.
India and Venezuela unveiled plans to deepen energy cooperation, with Caracas naming New Delhi a preferred partner as Middle East–related oil disruptions tighten global supplies; Rodriguez’s New Delhi visit will include refinery tours and talks on upstream and downstream projects, while India remains a major buyer of Venezuelan crude amid sanctions-era arrangements and Western supply pressures.
The Iran war has cut Europe’s jet-fuel imports while aging refineries and growing reliance on Middle East kerosene leave Europe vulnerable to shortages, sending long-haul flight prices higher—estimates from Transport & Environment place the increase around $105 (90 euros) per flight. Analysts warn Europe could face weeks of jet-fuel constraints, with Northwest Europe most exposed as more U.S. cargoes head to Asia, underscoring aviation’s vulnerability to fossil fuel supply disruptions.
Gas prices are driven by more than crude oil: crude costs about 51% of a gallon’s price, with refining ~20%, marketing and distribution ~11%, plus state and federal taxes; seasonal summer-blend requirements can add around 15 cents, and price differences across states reflect varying tax rates and costs, all while Brent oil prices influence wholesale costs.
Michael Burry has been holding Valero Energy since 2020, betting on a potential revival of Venezuelan oil exports and infrastructure, which could benefit U.S. refiners and oilfield service companies as Venezuela's oil industry potentially recovers with increased U.S. involvement.
The potential normalization of Venezuelan oil exports under U.S. influence could benefit U.S. Gulf Coast refiners by providing more heavy sour crude, while posing long-term competition to Canadian heavy crude producers, potentially impacting their market share and margins. Immediate effects are limited, but the geopolitical shift could reshape global heavy crude markets over time.
India's state-owned oil refiners are temporarily halting Russian crude purchases due to increased US pressure and tariffs, with plans to await government guidance, potentially shifting to Middle Eastern and other sources to meet demand, amid geopolitical tensions and market adjustments.