US refineries step up to meet global diesel demand

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In the world of energy markets, one move can ripple across the globe.

Russia’s diesel export ban in mid-July slashed global supply by about 10%, pushing countries like Brazil, Turkey and much of Africa to scramble for replacement barrels, which raised prices even higher.

US refineries are now racing to fill this gap.

Utilization rates have surpassed 96%, well above the five-year average, and exports have reached 8.7 million barrels per day, close to all-time highs.

US barrels are playing an increasingly important role in global supply, S&P Global Energy CERA analysts say.

The result? Refinery product cracks -- essentially refineries’ profit margins -- are at all-time highs, and future contract prices keep on climbing as traders brace for a tighter supply.

Meanwhile, US emergency crude reserves are shrinking, limiting the system’s ability to absorb shocks.

The Strategic Petroleum Reserve has dropped below 300 million barrels, its lowest level since the early 1980s.

CERA analysts now anticipate a 'second surge' in diesel exports in Q3, raising important questions about whether markets can absorb this shift.