Goldman Sachs doubles profit forecast for global diesel shortage
As the global diesel shortage deepens due to the wars in the Middle East and Ukraine, Goldman Sachs has significantly increased its production profit expectations for next year.
As the global diesel shortage triggered by the wars in the Middle East and Russia-Ukraine strains markets, financial institution Goldman Sachs has doubled its profit forecasts for refined products.
New forecasts in the global diesel crisis
Goldman Sachs warned of contraction in global refineries due to the impact of geopolitical conflicts and more than doubled its expectations for profits to be generated from diesel production.
Inventories declining in refineries
Refinery outages are running sixty percent above seasonal norms, and product inventories continue to decline despite some drops in demand. Compared to Brent crude, the profit for producing diesel next year is expected to be $63 in the US and $49 in the European Union.
Export bans and demand pressure
While Russia's extension of its diesel export ban and rising demand in Brazil exacerbate the difficulties, product prices including gasoline point to a fuel crisis that is outpacing increases in crude oil.
No sign of relief in markets
Goldman Sachs Global Commodities Director Nitin Jindal stated that there is no visible relief in the near term in refined product markets such as diesel, gasoline, and jet fuel.
The picture in the crude oil market
Jindal emphasized that the crude oil market does not carry as great a risk of disruption as refined products over the next few months, but that the refined product market is extremely tight.
China's adaptation to the energy crisis
China's transition to electric vehicles and its increase in power generation capacity play an important role in reducing the demand for petroleum products.