Diesel Futures Jump 141pc as Refinery Capacity Is Knocked Offline
- Diesel futures on ICE Futures Europe rose 141% to mid September against a 75% rise in Brent.
- Up to 8% of global refinery capacity is offline, the highest share in four decades outside the pandemic.
- A Saudi pipeline rerouting roughly five million barrels a day has been rebuilding since Houthi attacks on 11 September.
Diesel is moving faster than crude, and that gap is what actually lands on a UK manufacturer's invoice.
The number that matters here is not the oil price itself. It is the gasoil futures contract on ICE Futures Europe, the benchmark for diesel, which rose 141% between January and mid September, according to Handelsblatt. That is nearly double the 75% rise in Brent crude over the same period, and it is diesel and its derivatives, not crude, that sit in freight contracts and plastic packaging costs.
The trigger, reported by Beschaffung aktuell, is a widening set of supply threats around the Middle East. Houthi militias allied with Iran have strengthened their hold on the Bab al Mandab strait, including the island of Perim, at the entrance to the Red Sea. On 11 September, Houthi attacks struck the East West pipeline in Saudi Arabia, the route that has been carrying around five million barrels a day since the Strait of Hormuz was closed, roughly four million barrels a day more than before the war began. That pipeline is the reason oil prices have not risen further still.
Refinery capacity is the tighter constraint. Bank of America puts up to 8% of global refinery capacity offline, the highest share in four decades outside the pandemic, driven by the Middle East conflict and by Ukrainian drone strikes on Russian refineries. Diesel stocks are already at low levels going into the heating season, and futures markets are pricing further rises, with the article citing the possibility of diesel reaching three euros a litre at the pump if the conflicts do not ease.
For haulage and freight contracts, this is a fuel escalator problem. Many clauses were set when diesel and crude moved roughly together, and that link has broken. For plastic packaging, resin priced off naphtha faces the same disconnect, since naphtha yields move with refinery output rather than with crude alone. For any site burning heating oil or gasoil this winter, the cost line is rising into the season when demand is highest, not falling out of it.
The practical step this quarter is to pull the fuel and naphtha indexation clauses in freight and packaging contracts and check how quickly they actually pass this kind of gap through, rather than assuming the crude price still tells the story.
Businesses that get ahead of this are the ones checking their escalator formulas against gasoil, not Brent. Those caught out are the ones still watching the wrong number.