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Opinion
Javier Blas

The Oil Price Rally Is Bad. The Diesel Crisis Is Far Worse

Diesel is the workhorse of the global economy. And prices have surged in recent days to an all-time high.

Filling up.

Filling up.

Source: Bloomberg

Winston Churchill famously referred to Russia in 1939 as a series of layers: a riddle, wrapped in a mystery, inside an enigma. Very much like a matryoshka doll. The oil market of 2022 is a bit similar: a tight crude market, wrapping an even scarcer oil feedstock market, enclosing a diesel market in crisis mode.

Oil benchmarks Brent and West Texas Intermediate tend to grab the attention of financial markets. However, regular consumers — households and businesses — don’t buy crude; they purchase refined petroleum products such as diesel and gasoline. Now, there isn’t much diesel to buy.