The Wall Street Journal reports that a global fuel crisis has already begun. The paper says the main drivers are the prolonged closure of the Strait of Hormuz and a continued drawdown in fuel inventories worldwide.
According to the publication, U.S. oil companies had been warning for months that an extended shutdown of the Strait of Hormuz would inevitably trigger a fuel crisis. They now say that scenario has started to play out.
WSJ says commercial fuel stockpiles around the world have been falling for more than half a year. At the same time, the ability to rely on strategic reserves is also nearing its limits, reducing a key buffer that had previously helped soften supply disruptions.
The market has come under additional pressure from damage to an oil pipeline in Saudi Arabia, which has removed about 2.5 million barrels of oil per day from the market. In the newspaper’s view, that has further worsened supply strains.
Chevron chief Mike Wirth said the mechanisms that previously helped cushion the impact of supply disruptions have largely exhausted their capacity. In his view, a rapid decline in oil prices currently looks unlikely.
Against that backdrop, the price of diesel in the United States has reached a record $6.23 per gallon, or about $1.64 per liter. Gasoline has risen to $4.32 per gallon, or around $1.14 per liter.
At the same time, the administration of U.S. President Donald Trump continues to view the supply disruptions as temporary.
