Page 6 - DMEA Week 20 2022

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was to blame for fuel supply shortages and high demand in 2020 forced a number of US refiner-
prices. “All mobility fuels have skyrocketed ies to close, while others opted to convert their
... and the gap between crude prices and these plants to biofuel production. Now, the reopen-
products in some cases is actually 60%,” he said. ing of economies and the resumption of travel
“The facilities that can convert oil into usea- is combining with disruptions related to the
ble products have shrunk and ... are shrinking. Ukraine war to drive up demand and prices for
So, is it an issue of crude availability? The answer fuel, including diesel and jet fuel. Meanwhile, as
is ‘no,’” he told attendees at an industry event in other countries shun Russian fuel, they increas-
Bahrain. ingly look to other sources, including the US, for
Highlighting a 650% increase in refining mar- supply.
gins compared to the five-year average between The US is by far the world’s largest producer
March 2021 and today, he said this clearly shows of jet fuel, and output has been steadily rising
that “there is no refining capacity commensurate as both domestic and international air travel
with the current demand and the expectation of has rebounded from the early waves of the pan-
demand this summer.” demic. This is expected to continue, but it will
As if to hammer home his point, Prince put pressure on some elements of an already
Abdulaziz then called for “people to reconsider stressed distribution network.
what they are doing with their taxing if they are For diesel, pressures look set to be exacer-
complaining about crude prices and refined bated further still by the arrival of the summer
product prices.” driving season in the US. Record-high prices
have not yet dented demand.
North America
But complaints about prices have certainly Latin America
flowed freely in the US. Both diesel and gasoline In Latin America, the war in Ukraine and the
prices have continued to hit new record highs in removal of Russian barrels from the world crude
that country. market does not seem to have led directly to
This is partly because the war in Ukraine extensive disruptions to diesel or jet fuel sup-
has disrupted global flows of crude and refined plies, despite the fact that many of the countries
products. US President Joe Biden has attempted in the region depend on US imports.
to ease the pressure on fuel prices by releasing However, fluctuations in crude oil prices have
large volumes of crude from the country’s Stra- caused the price of refined products to go up in
tegic Petroleum Reserve (SPR), but to limited most Latin American countries. Fuel tariff hikes
effect. Refiners are still struggling to keep up with have helped trigger street demonstrations and
demand, and the fact that US refining capacity, strikes in multiple countries, including but not
at 18.1mn bpd, has dropped to its lowest level limited to Chile, Honduras, Paraguay and Trin-
since 2015 is not helping. EIA data show that die- idad and Tobago.
sel inventories on the US East Coast have fallen They are also playing a role in Brazil’s upcom-
considerably below typical levels. ing presidential vote. The country’s incumbent
But there are other factors at work too. For President Jair Bolsonaro, who hopes to retain
the US, these developments represent a contin- his job in the October election, depends on the
Source: Saudi Ministry uation of dynamics that emerged because of the political support of Brazil’s independent truck-
of Energy coronavirus (COVID-19) pandemic. A slump in ers. As a group, these truckers wield considerable

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