Nobody’s Talking About This ‘Major Crisis’: Global Diesel Shortage Gets Worse | Paul Sankey

Global energy markets face a critical juncture characterized by record-high diesel prices, extreme refining utilization rates, and severe geopolitical instability. Paul Sankey, president of Sankey Research, highlights that the U.S. refining system is operating at near-maximum capacity, leaving little margin for error as the harvest season increases diesel demand. Ongoing drone attacks on Saudi infrastructure and restricted transit through the Strait of Hormuz exacerbate supply shocks, pushing oil prices toward $110 per barrel. While China remains a pivotal marginal buyer, its potential to stabilize the market is constrained by supply security concerns. High energy costs are inherently inflationary, threatening to force the Federal Reserve into a difficult position where interest rate hikes could trigger demand destruction and recession. The current environment suggests that oil prices will likely remain elevated, with significant upside risks persisting through the winter months.