Publications: Notes at the Margin

The Squeeze: Consequences of Sterlized Oil (February 2, 2026)

 

Dated Brent rose by $10 during January, rising to almost $73 per barrel. The increase defied predictions of falling crude prices based on expectations for a growing global crude oil surplus. We attribute the price increase to the “sterilization” of large volumes of Russian oil resulting from sanctions. However, the most important contributor to the increase seems to be the sanctions’ impact on products derived from Russian crude. These new regulations have distorted the diesel and gasoil markets, leading to price increases of up to $25 per barrel. Further price increases for diesel and gasoil may be forthcoming as data center construction accelerates. In short, the diesel squeeze may trump the crude glut.

 

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