Markets facing distillate squeeze

Crude production cuts and refinery outages mean high prices are looming for heating oil and diesel this winter, and greater shale output will do little to help

The world is looking at another autumn and winter of high distillate prices, with the potential for the largest margins on record from October 2023 to March 2024. Were a major hurricane to shut down US Gulf Coast refineries, a difficult situation could turn into a catastrophe, with retail diesel consumers in certain areas paying more than $10/gal. A combination of factors have created this situation. Production cuts by Saudi Arabia and Russia have deprived the world of distillate-rich crudes, and US shale oil output is of little use because these light crudes lack a significant distillate ‘cut’. The shutdown of two North American East Coast refineries this autumn will also remove additional