Publications: Notes at the Margin

A Third Distillate Disruption; The Rising Cost of Light Crude Dominance (July 28, 2025)

 

Distillate market disruptions have propelled crude prices above $100 per barrel twice in this century. Markets now teeter on the brink of a third disruption. Once again, the combination of a glut of low-distillate-yield crudes, efforts by oil-exporting nations to boost prices, refinery shutdowns, and ill-conceived government policies threatens to push prices for diesel and low-sulfur distillates to record or near-record levels. The trade war instigated by the United States will exacerbate market tightness by diverting key oil supplies from sophisticated refineries in the United States, while Asian refineries purchase distillate-poor US crude to appease Trump trade hawks.

 

To meet rising demand for these products, refiners will bid up low-sulfur, distillate-rich crudes such as Nigeria’s Bonny Light. The record or near-record production of US crude oils with low diesel and distillate yields will exacerbate the increase by “crowding out” the distillate-rich crudes.

 

To receive the full report along with future issues of Notes at the Margin, please Contact Us or send us an Information Request for subscription information.