According to Bloomberg News, the US truckers and farmers are shelling out a price that is the highest in nine years for diesel after oil surged over $100 per barrel as sanctions intensified against Russia.
Present and future of diesel
The average retail price of diesel increased to $4.016 per gallon on Tuesday, the highest it reached since late March 2013. The Ultra-low sulfur diesel futures traded at $3.12008, the highest in eight years, and recorded $3.2008 on Tuesday. This is not a good omen for the consumers because the price of pumps monitors the futures within the next few weeks.
Bloomberg News reports that those farmers that operate diesel-powered machinery anticipate that they will burn a lot more fuel as they aim to plant wheat, corn, and soy, the largest combined crops since 2014. The highway truckers are earning more miles than before the pandemic struck, thereby adding to the already strained supplies.
The escalating prices of diesel are not good news for US President Joe Biden, whose priority lies in capping the cost of domestic fuel by keeping at direct bay sanctions on the Russian energy exports. However, there is a surge in oil, just as in the case of inflation.
Bloomberg News reports that the strain on the diesel markets in the United States might worsen if Europe is seen turning to the Gulf Coast refiners to replace supplies from Russia, under threat from disruptions in shipping and financial sanctions. A tightening diesel market could pose a bigger challenge for Europe than a squeeze on the crude.
The stockpiles of US diesel are already at the bottom lowest since 2019, and an eight-year low if taken on a seasonal basis.
