LONDON (Bloomberg) - A sharp slump in diesel reserves across the EU is expected this winter once the ban on exports of Russian oil and petroleum products comes into effect, Bloomberg reported.
According to Wood Mackenzie estimates, diesel reserves in northwestern Europe will plummet to 210.4 million barrels in February, the lowest since 2011, while the looming embargo on Russian crude scheduled for the same month is driving diesel prices up.
“The drop in February is expected due to the end of Russian imports, at a seasonally high demand period,” the principal analyst at Wood Mackenzie, James Burleigh, said, warning that imports from alternative “longer-haul sources may be constrained.”
Diesel helps power large parts of the European economy, and more than a third still comes from Russia. Given that the EU now needs much more diesel than it can produce, the situation could become even worse due to recent strikes at French refineries, which have halted fuel production.
The consultancy firm noted that continuing disruptions could slash future stock forecasts even further, predicting reserves to slump by almost 6 million barrels in October.
Meanwhile, diesel prices in the EU and U.S. have already seen their sharpest increase in months, with the fuel’s premium to crude oil well above seasonal norms around the world.
Analysts warn that the spike in diesel prices is driving inflation ahead of winter and raising the prospect of supply disruptions, particularly in the EU, heightening the risk of a global recession.