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Oil refiners in the Middle East and Asia have seen diesel output crippled as disruptions cut them off from crude supplies
By Robert Tuttle
Synthetic Canadian oil prized by refiners for its rich diesel output tripled in a matter of days amid a worldwide clamour to secure supplies of the truck and train fuel.
The oil produced via special processing of bitumen from Alberta’s oilsands is commanding US$19.25 a barrel more than the monthly average for the United States benchmark, West Texas Intermediate, according to Modern Commodities data. That’s an almost 200 per cent increase since March 27.
It’s also a stark reversal from the day before the Iran war erupted, when synthetic crude traded at an 85-cent discount to WTI, the data showed.
Diesel markets are in upheaval as Iran’s effective closure of the Strait of Hormuz and retaliatory attacks on Persian Gulf energy infrastructure disrupted global energy flows.
European diesel futures climbed above US$200 a barrel for the first time since 2022 after U.S. President Donald Trump said the United States would hit Iran hard over the next two to three weeks, and that Hormuz would open “naturally” after the conflict ends.
Oil refiners in the Middle East and Asia have seen diesel output crippled as the shipping disruptions cut them off from traditional crude supplies.
Synthetic crude’s chemical makeup and very low sulphur content means refiners can extract more diesel and jet fuel compared with other grades of oil. Imminent maintenance work that will reduce activity at some oil sands upgraders is contributing to the price increase for synthetic crude.
Bloomberg.com
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