NEW YORK, July 8 (Reuters) – U.S. diesel futures were set for their biggest daily gains in four years on Wednesday after Russia announced a ban on exports of the industrial fuel, supercharging supply concerns in a market grappling with uncertainty about Middle Eastern oil flows.
The ultra-low sulfur diesel futures benchmark on the New York Mercantile Exchange settled up 11.6% at $154.71 a barrel, the highest level in over a month and the biggest daily gains for the contract since March 2022.
The sharp price response to Russia’s export ban, implemented in the face of intensifying Ukrainian drone attacks on its refineries, highlights the extreme tightness in global diesel markets. The attacks on Russian refineries, combined with plant closures elsewhere, years of supply cuts by the OPEC+ group and disruptions from the Iran war, have limited diesel production and kept inventories tighter-than-normal around the globe.
“Diesel is the one product that everybody needs to watch,” said Tom Kloza, chief energy adviser to Gulf Oil. “It was stressed even before the Russian ban, and now you have a very, very strong setup for the middle of the barrel.”