Europe’s diesel shortage is becoming worse as Russian oil refiners have started to cut back on refinery throughput, according to the chief executive of one of the world’s largest independent commodities trading houses, Gunvor.
This is a global problem but for Europe it’s very hard because Europe is so short of diesel, Gunvor CEO Torbjorn Tornqvist said at the Financial Times Commodities Global Summit as carried by Bloomberg.
Diesel stocks globally were already low even before the Russian conflict in Ukraine. Reuters shows that, diesel fuel stocks in Europe are at their lowest since 2008, and 8%—or 35 million barrels—lower than the five-year average for this time of the year.
In the United States, the situation is graver still. There, diesel fuel inventories are 21% lower than the pre-pandemic five-year seasonal average, which translates into 30 million barrels.
In Singapore, a global energy trade hub, diesel fuel inventories are 4 million barrels below the seasonal five-year average from before the pandemic.
One of the core staples of the past 40 years, and an anchor propping up the dollar’s reserve status, was a global financial system based on the petrodollar.
China buys more than 25% of the oil that Saudi Arabia exports, and if priced in yuan, those sales would boost the standing of China’s currency, and set the Chinese currency on a path to becoming a global petro-yuan reserve currency.
Still, the Saudis plan to do most oil transactions in dollars, but the transition has begun, and the move could tempt other producers to price their Chinese exports in yuan as well. China’s other big sources of oil are Russia, Angola, and Iraq.
And so the pieces of the endgame are falling into place.
Russia starving the western world of much-needed resources, sending commodity prices ever higher, while its silent partner China quietly picks up the monetary pieces and takes advantage of the Western scramble to secure resources at all costs.
China now approaches all those other “non-western” former petrodollar clients – who are also rich in other resources – to offer them a new product, the yuan, which Beijing is now actively and aggressively pushing to dethrone the dollar as a global reserve currency.
Oil Prices / ABC Flash Point News 2022.