Shortages of gasoline, diesel and lubricants are spreading across the world as the supply shock from the Middle East drags on.
Fuel Sold Out at 15% of French Stations
About 15% of France's roughly 9,900 registered service stations had run out of at least one of gasoline or diesel as of the 20th, French broadcaster TF1 reported. The share had been below 10% as recently as the middle of last week, jumping within a matter of days. European diesel prices recently hit a record 2.39 euros per liter, Reuters reported.
The shortages follow a sharp drop in tanker traffic through the Strait of Hormuz amid intensifying fighting between the United States and Iran, along with a complete shutdown of Saudi Arabia's East-West pipeline after a drone strike launched from Iraq. Saudi Aramco recently notified at least two major European refining customers that it could not allocate their contracted crude volumes for next month, Russia's state-run RIA Novosti reported. Aramco has also told European customers it will cancel some crude deliveries planned for the end of this month.
Lubricants Running Short, U.S. Diesel Tops $6.50 for First Time
In the United States, supplies of a key raw material for automotive motor oil have been cut off, driving prices sharply higher and leaving some retailers and repair shops short of stock, the Financial Times reported the same day. The U.S. price of Group III base oil, the feedstock for the fully synthetic motor oil used mainly in newer vehicles, recently reached $12.45 per gallon, according to commodity price reporting agency Argus Media. That is four times the level in February of this year, when the war between the United States and Iran broke out. The disruption began in March, when Iran struck a large gas-to-liquids plant in neighboring Qatar operated by Shell in retaliation against the United States, and has continued since, the FT said. Global base oil exports run at about 350,000 barrels a day, a small volume compared with the roughly 100 million barrels a day of the overall oil market. That means even a modest drop in supply sends prices sharply higher.
Diesel prices in the United States also topped $6.50 per gallon for the first time. Prices have been climbing relentlessly since crossing $6 per gallon for the first time only on the 11th of this month. Passenger cars in the United States rarely run on diesel, but trucks that carry freight, along with farm machinery, ships, trains and generators, all depend on it.
Ahead of November's midterm elections, such increases in diesel prices could erode support for Republicans not only in farm states such as Iowa but also in states heavily reliant on heating oil, such as Maine, Bloomberg reported.
Biodiesel Turns Cheaper Than Diesel
In Europe, an unusual reversal has taken hold, with prices for biodiesel made from eco-friendly materials falling below those for conventional diesel. Marine biodiesel prices dropped to a record low of $985 per ton at one point during trading on the 21st before rebounding to around $1,240, according to Argus Media. Marine diesel, by contrast, recently traded at $1,528.50. Even after adding in all the costs of the European Union's carbon rules on shipping fuel, biodiesel has become cheaper than almost every other marine fuel, Argus Media noted.
More Than 90 Countries Step In to Help With Fuel Costs
More than 90 countries have moved to cushion fuel costs as the crunch deepens. In an analysis of International Energy Agency data published on the 21st, the FT said 38 countries were providing direct fuel subsidies as of early September to shield domestic consumers from the surge in fuel prices.
The number of countries offering subsidies has more than doubled over the past four months, from 16 to 38.
Separately, the number of countries that cut taxes on energy rose to 57 from 40 over the same period. South Korea is among those easing the burden on consumers, through a reduction in its fuel tax. In all, the number of countries with consumer support measures tied to fuel costs rose to 94 from 56.
With Brent crude surging to nearly $110 a barrel last week, governments around the world are under pressure to roll out consumer support measures or expand existing ones, the FT said.
