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2026-09-21 18:18:11
[The world is not short of crude oil, but of refining capacity] ⑴ The current global crude oil supply is not short; the real bottleneck lies in insufficient distillation capacity. ⑵ Europe has closed a large number of refineries over the past 20 years, and some refining facilities and infrastructure in Russia and Saudi Arabia have also been damaged. ⑶ Major suppliers of refined petroleum products, such as India and the United States, still exist, but they are farther away and more expensive. ⑷ Since 2000, Europe has closed 34 of its 109 refineries, mainly due to higher costs than its Asian competitors, energy transition, and rising CO2 costs. ⑸ Europe has been a net importer of diesel for many years, with Russia accounting for nearly half of its diesel imports. After the ban, it mainly shifted to Saudi Arabia, the United States, and India. ⑹ In 2026, Ukraine attacked 25 of Russia's 32 refineries, and Russia subsequently banned the export of gasoline, kerosene, and diesel. ⑺ Since February 2026, navigation in the Strait of Hormuz has been severely disrupted. For Europe, the Persian Gulf is no longer a reliable source, and it has instead relied on Saudi Arabia and the Red Sea. (8) A large oil refinery in Jizan, Saudi Arabia, was attacked, and the east-west pipeline, which was intended as an alternative route in case the Strait of Hormuz was blocked, was also attacked in early September. (9) Diesel prices in the EU have risen by about 40% on average since February, even though the heating season has not yet fully begun. (10) Some argue that reducing energy demand is the cheapest way to obtain energy, but whether this approach will be effective given the limited supply remains to be seen.
