Market concerns that a middle-distillate supply crisis is in the making have only been exacerbated by war in Ukraine. Diesel demand had already reached new record highs in 4Q 2021 according to the IEA, while “at the same time, global diesel supply is constrained. Refiners have under-produced relative to demand for six consecutive quarters,” the organization warned in February.

The report added that diesel markets were also belatedly feeling the dislocations caused by the IMO 2020 regulations, which banned the use of high sulfur fuel oil as a marine bunker fuel from 2020 (MEES, 15 February 2019). Marine gasoil was the prime alternative but the impact of the shift was muted at the time as the shift coincided with the emergence of the Covid-19 pandemic from early 2020. (CONTINUED - 1702 WORDS)