Page 8 - NorthAmOil Week 20 2022

NorthAmOil COMMENTARY NorthAmOil

Highlighting a 650% increase in refining mar- is combining with disruptions related to the
gins compared to the five-year average between Ukraine war to drive up demand and prices for
March 2021 and today, he said this clearly shows fuel, including diesel and jet fuel. Meanwhile, as
that “there is no refining capacity commensu- other countries shun Russian fuel, they increas-
rate with the current demand and the expecta- ingly look to other sources, including the US,
tion of demand this summer.” for supply.
As if to hammer home his point, Prince The US is by far the world’s largest producer
Abdulaziz then called for “people to reconsider of jet fuel, and output has been steadily rising
what they are doing with their taxing if they are as both domestic and international air travel
complaining about crude prices and refined has rebounded from the early waves of the pan-
product prices.” demic. This is expected to continue, but it will
put pressure on some elements of an already
North America stressed distribution network.
But complaints about prices have certainly For diesel, pressures look set to be exacer-
flowed freely in the US. Both diesel and gasoline bated further still by the arrival of the summer
prices have continued to hit new record highs in driving season in the US. Record-high prices US refining
that country. have not yet dented demand.
This is partly because the war in Ukraine has capacity, at
disrupted global flows of crude and refined Latin America 18.1mn bpd, has
products. US President Joe Biden has attempted In Latin America, the war in Ukraine and the
to ease the pressure on fuel prices by releasing removal of Russian barrels from the world crude dropped to its
large volumes of crude from the country’s Stra- market does not seem to have led directly to
tegic Petroleum Reserve (SPR), but to limited extensive disruptions to diesel or jet fuel sup- lowest level since
effect. Refiners are still struggling to keep up plies, despite the fact that many of the countries
with demand, and the fact that US refining in the region depend on US imports. 2015.
capacity, at 18.1mn bpd, has dropped to its low- However, fluctuations in crude oil prices have
est level since 2015 is not helping. EIA data show caused the price of refined products to go up in
that diesel inventories on the US East Coast have most Latin American countries. Fuel tariff hikes
fallen considerably below typical levels. have helped trigger street demonstrations and
But there are other factors at work too. For strikes in multiple countries, including but not
the US, these developments represent a contin- limited to Chile, Honduras, Paraguay and Trin-
uation of dynamics that emerged because of the idad and Tobago.
coronavirus (COVID-19) pandemic. A slump They are also playing a role in Brazil’s upcom-
in demand in 2020 forced a number of US refin- ing presidential vote. The country’s incumbent
eries to close, while others opted to convert their President Jair Bolsonaro, who hopes to retain
plants to biofuel production. Now, the reopen- his job in the October election, depends on
ing of economies and the resumption of travel the political support of Brazil’s independent

P8 www. NEWSBASE .com Week 20 19•May•2022