Diesel Finely Balanced with Tight Supplies: IEA

The IEA Oil Market Report forecasts global diesel/gasoil growth to ease from 1.5mb/d in 2021, to 400kb/d in 2022 before a small decline in 2023 due to persistently high prices, a slowing economy and despite increased gas-to-oil switching.

• The approaching EU embargoes on Russian crude and oil product imports and a ban on maritime services will add further pressure on global oil balances.
• Diesel supplies are exceptionally tight with distillate inventories at 18 year lows. Markets were already in deficit before Russia’s invasion of Ukraine due to refinery closures since the start of covid resulting in a net decline of 1mb/d.
• A recent increase in Chinese product exports and a net 2.7mb/d of new distillation capacity due online by the end of 2023 could offset lower exports from Russia following the EU embargo.