Publications: Notes at the Margin

The Global Diesel Squeeze: Arbitrage Implications

 

Benjamin Netanyahu and Donald Trump’s war on Iran has created a global energy crisis. Diesel and jet fuel consumers have felt the most severe impacts. An arbitrage opportunity of record proportions now exists for diesel. At the close of business on April 2, US buyers could acquire a barrel of diesel for around $170 in the Midwest or $188 in New York’s cash market.

 

European consumers confronted a price of almost $220 per barrel for the same product, a premium of $30 to New York. Meanwhile, buyers in Singapore must pay more than $290 per barrel, a premium of $110 to New York and $150 to spot supplies in Chicago. These premiums are extraordinary. However, they are, except for Singapore, just the start.

 

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