As we approach the winter season, the International Energy Agency (IEA) has issued a warning regarding a potential diesel shortage in Europe. This shortage may cause fuel prices to spike and is primarily a result of the embargo on Russian crude oil, imposed by the European Union. Also, the geopolitical tensions brewing in the Middle East are adding to the crisis.
Shift in Diesel Prices
The cost of diesel, previously deemed “relatively” stable, is now on the brink of hitting the 2 euro per litre mark. European refineries are finding it difficult to boost diesel production, a factor that could cause the price to increase significantly. It’s noteworthy that since the end of 2020, diesel prices have already seen considerable hikes. If this trend continues, it could be the third time in history that the price exceeds 2 euros per litre.
Diesel Price History Over the Last Decade
Let’s take a look at the fluctuations in diesel prices over the last decade:
- 1.33 euros on October 21, 2013
- 1.39 euros on January 1, 2018
- 1.28 euros on December 28, 2020
- 1.63 euros on January 10, 2022
- 1.76 euros on December 19, 2022
- 1.72 euros on June 26, 2023
- 1.95 euros on September 21, 2023
- 1.90 euros on October 26, 2023
The fact that these figures are steadily on the rise is cause for concern.
Geopolitical Tensions and Their Impact
It’s important to note that the ongoing conflict between Israel and Hamas is also impacting diesel prices. The geopolitical challenges in the Middle East are creating a risk premium on oil prices, essentially driving them upwards.
The IEA has proposed importing a massive amount of diesel to buffer against potential shortages in Europe. However, the strict quality specifications for winter fuel limit the available supply sources. The severity of this situation may well depend on how harsh the winter turns out to be. If the winter season proves to be mild, fuel shortages might be avoided.
The outcome of this crisis will largely depend on the events of the forthcoming weeks.