To those who think that crack spreads for refined oil products have peaked, the below links will make you think twice.  Unfortunately, you can’t read all articles fully because some of them need to subscription. 

Quote from the first link “Diesel is today more expensive in America that it was in 2008, when the price of crude oil surged to nearly $150 a barrel compared with little more than $100 currently.” If you have access to the latest article from the Economist (link here is not full article), it’s a good read and the last link tells you why Pakistan is in such a bad position (surging demand but decline in local production).

https://www.qcintel.com/article/cracks-to-remain-strong-as-refining-capacity-has-run-out-morgan-stanley-5750.html

https://www.washingtonpost.com/business/energy/us-east-coast-diesel-supply-is-running-on-fumes/2022/05/04/1ef4623e-cb83-11ec-b7ee-74f09d827ca6_story.html

https://global.chinadaily.com.cn/a/202205/05/WS62733764a310fd2b29e5ab96.html

https://www.economist.com/middle-east-and-africa/2022/05/07/why-fuel-shortages-are-spreading-across-africa

https://www.thenews.com.pk/print/955455-refineries-output-drops-27pc-in-9-months

So how did the world get to the current situation?

1. Russia Ukraine war.
2. Lifting of covid restrictions.
3. ESG – we shut down more capacity than we built and no new plan for significant capacity increase. A refinery takes years to build but need to think twice building a new one (world is aiming to phase out fossil fuel in the future right?)

These are facts currently playing out and I see no good solution in the short to medium term.  

Have a good weekend everyone!