Russia's Export Ban Sends Diesel Prices to Four-Year High

Russia's decision to ban the export of industrial fuel has sent US diesel futures to their biggest daily gain in four years. Ultra-low-sulfur diesel futures on the New York Mercantile Exchange rose 11.6% to $154.71 per barrel, the highest level in more than a month. The move is the largest daily gain since March 2022. Russia implemented the export ban in response to increased drone attacks on its refineries by Ukraine. The decision comes at a time when global diesel markets are facing supply constraints from multiple sources. Drone attacks on Russian refineries by Ukraine, shutdowns in other regions, years-long production cuts by the OPEC+ group, and disruptions caused by the Iran war have all contributed to limited diesel production. Global stocks remain at relatively tight levels. Tom Kloza, head of energy analysis at Oil Price Information Service, said 'Diesel is the one product that everyone needs to watch. It was already under pressure before the Russian ban, and now it's a very strong setup for the middle of the barrel.' Government data released on Wednesday showed that US diesel and heating oil inventories fell by about 5 million barrels last week. Stocks declined to about 103.6 million barrels. The drop follows record seasonal exports and strong domestic demand. Current stock levels are about 7% below the five-year average. Russia's export ban has further tightened global diesel markets, leading to higher prices. This could be a concern for the global economy, as diesel is a critical fuel source for many industries. Russia's export ban will be a test for the global economy.