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2026-11-03 20:40:26
[Crude Oil Price Drop Fails to Transmit to Diesel; Damaged Refining Facilities are Key] ⑴ US diesel futures reacted mildly to Monday's sharp drop in global crude oil prices, with the price of this industrial fuel still more than 100% higher than at the end of 2025. ⑵ This indicates that the key to the current surge in diesel prices lies in damage to global refining infrastructure, rather than a shortage of crude oil supply. ⑶ Analysts typically observe the relationship between prices in different markets through changes in correlation; 1 indicates that prices always move in the same direction, and -1 indicates that they never move in the same direction. ⑷ Charts show that the short-term 20-day rolling correlation between US benchmark diesel futures and Brent crude oil futures has disappeared in the past two months. ⑸ Iranian attacks on refining facilities around the Persian Gulf and Ukrainian drone strikes on Russian refineries have significantly weakened the ability of both locations to supply diesel to the global market, pushing up global prices. ⑹ The International Energy Agency noted in its October oil market report that global diesel prices have fallen from their record high of over $200 per barrel in September, but the benchmark price is still close to twice the price of crude oil, and also close to twice the pre-crisis level. (7) The International Energy Agency stated that record diesel prices have had widespread economic consequences, pushing up commodity costs and impacting real income, economic activity, and inflation. (8) Further developments need to be monitored to determine whether a renewed and intense conflict between the United States and Iran is possible.
