Publications: Notes at the Margin

Ukraine's Threat to Diesel Prices; Further Thoughts on the China Disruption (September 29, 2025)

 

Ukraine’s attacks on Russia’s oil infrastructure are taking a toll on the Russian Industry. Gasoline shortages have been observed in many cities. Limits on product exports have been imposed. So far, there has been little impact on global markets. Further, crude markets could withstand the loss of most Russian exports.

 

Diesel markets, though, are exposed. Russia supplies approximately 4% of the fuel consumed globally. A loss of a significant portion of Russian supplies could push prices up by 40%, although the likely impact would probably be much smaller. Brazil is the most vulnerable nation.

 

Donald Trump’s threats (a.k.a. extortion) aimed at forcing countries to stop importing Russian oil and products exacerbate the situation. Caving in to these threats effectively requires the target nations to increase their energy costs, likely cutting their economic growth while increasing their energy insecurity.

 

Meanwhile, China continues to quietly wage economic war on the US by supporting oil prices and accelerating its sales of electric vehicles. Auto industry experts see China’s actions as isolating and dooming the US auto industry. At the same time, China’s refusal to buy US soybeans is destroying a significant portion of our domestic agricultural sector.

 

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