As Exports Rise, The World Can't Get Ample US Diesel

Gas station with mountains in the background
The Americas Corporate News Offshore
By
Updated Published

Due to the continued insatiable need for gasoline on the worldwide market, the United States is exporting diesel at its quickest rate ever.

According to oil analytics company Vortexa, which started trading the data in 2016, up to 1.39 million barrels of diesel per day have departed the US Gulf Coast so far this month. This is around 10% more than the previous daily record for the month that was set in July 2017. Including gasoline, Gulf Coast fuel exports in the first half of July exceeded 2 million barrels per day, a record.

The significant export growth demonstrates how heavily the globe still depends on the US for the energy that drives global economies, industries, and agriculture. In the United States, but not everywhere in the globe, gasoline is the main form of transportation fuel. As demand for diesel fuel continues to outpace supply, more is being done to secure it.

Mexico, Brazil, Chile, and Argentina receive the majority of the US's diesel exports. There have been energy crises in several parts of Latin America, which have sparked riots and political unrest. These nations have recently started taking out more fuel from the US Gulf Coast. A stronger European market and reduced freight prices have further strengthened the arbitrage for transatlantic diesel exports, which has further increased shipments from the US Gulf Coast to Europe.

The strength of the global diesel market is reflected in American drivers' gas station costs. According to auto club AAA, the average retail price of diesel has decreased by 3.6 percent in the last month, compared to an 8.7 percent decrease in the price of gasoline.

The so-called 3-2-1 crack spread, which measures refinery margins for converting crude oil into fuel and is now trading at $44 per barrel, is also supported by the strength of the diesel market. This is one of the factors driving US refiners to operate at nearly record rates even as domestic gasoline consumption has decreased. Refineries along the Gulf Coast ran at 98.1% of their capacity last week, the highest level since December 2018, according to data from the US Energy Information Administration.