Global jet fuel, diesel prices poised to surge more than crude as Iran war rages- Report

The ongoing war in Iran, which has spread throughout the Middle East, is expected to increase prices for jet fuel and diesel more than for crude oil, as stated in a report by Goldman Sachs Group. Analysts Yulia Zhestkova Grigsby and Daan Struyven noted that “Prices have rallied much more for many refined products than for crude.” They explained that serious supply issues with medium-heavy crude could lead to lower production of diesel, jet fuel, and fuel oil. The current conflict, which began on February 28, has thrown global energy markets into chaos due to the US-Israeli military actions against Iran. This situation has caused oil and product exports through the Strait of Hormuz to stop and has resulted in attacks on energy facilities in the area. Consequently, crude producers are reducing output and shutting down some refinery operations. Since the initial attacks, crude prices have risen more than 40 percent, with Brent crude surpassing $100 per barrel, but the prices of products like jet fuel and diesel have increased even more. In certain parts of Asia, fuel prices have doubled, prompting countries such as China, Thailand, and South Korea to limit exports to safeguard their local markets. The Goldman analysts pointed out that “No products or regions are fully immune.” The war is impacting the ability of Persian Gulf producers to export refined products, which has led to refinery shutdowns and reduced the supply of crude oil types best for producing diesel. They highlighted that nearly 60 percent of typical crude exports from the Persian Gulf consist of medium and heavy crude, mainly used for jet fuel, diesel, and fuel oil, with few alternative suppliers outside the Middle East. The ongoing conflict will also disrupt the supply of ‘naphtha,’ a refining byproduct used in petrochemicals that is essential for some manufacturers, alongside jet fuel, according to the Goldman Sachs report.