Refinery cuts diesel production to prioritize fuel oil amid shipping shortage fears
Global refineries are cutting diesel output due to a looming third-quarter fuel shortage and escalating tanker disruptions caused by conflict. Russia, the Middle East, and China have already restricted output or exports to avoid stockpile depletion.
Refineries across Russia and the Middle East face severe pressure as war disrupts crude processing and vessel movement. To manage supply tightness, these facilities are prioritizing diesel production over fuel oil and other petroleum products. In China, companies have reduced refining capacity and product exports to prevent draining local inventories. Consequently, refined oil prices have surged sharply despite stable crude prices in recent months. This shift threatens shipping companies and power generators, who already bear costs related to war-related disruptions. If bunker fuel prices rise further, freight rates may increase significantly. Asian markets face the greatest risk of shortages due to regional dependence on diesel for industry and power generation.
