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As volatility returns to crude oil prices, another no less important angle emerges in global energy markets: gasoline and diesel. Indicators from refined fuel markets reveal growing supply pressures, raising a fundamental question for investors and policymakers: Is the coming problem in the price of oil itself, or in the ability of global refineries to meet fuel demand?

According to the International Energy Agency, gasoline and diesel markets continue to suffer from supply shortages, driven by declining inventories, rising demand during the summer travel season, and disruptions in shipments of petroleum products related to Russia and the Middle East.

In Russia, attacks and restrictions have affected diesel exports, while tensions in the Middle East have limited the ability of some Gulf refineries to export gasoline, diesel, and jet fuel at the usual pace.

These developments have contributed to raising global refining margins, with the European diesel refining margin exceeding $60 per barrel, while European gasoline traded at a premium of nearly $41 per barrel over crude, the highest levels for gasoline since the summer of 2022.

The International Energy Agency warns that any new escalation in geopolitical tensions, especially in the Middle East, could put renewed pressure on supply chains, at a time when markets are still trying to absorb the effects of shipping and refining disruptions over the past months.

Global Inflation

The significance of this story is not limited to the energy sector; higher diesel prices directly impact transportation, shipping, agriculture, and industrial costs, which could add new pressures on global inflation and complicate the task of central banks seeking clearer signs of a slowdown in prices.

For the region, these developments place Gulf markets at the heart of the scene, not only as a major source of oil but as a key player in the global energy security equation, especially given the importance of Gulf refineries and their shipments in meeting demand for refined products.

As markets await OPEC's monthly report and US inflation data this week, energy appears set to remain one of the most influential factors in market trends in the coming days.

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