The chief of a US energy investment firm says diesel prices have been "really high" and need to be watched as tensions continue to fester in the Middle East.
The 60-day negotiation window for the US and Iran to find a way to end the war in the Middle East has closed without a lasting deal.
Crude oil prices are back up, hovering around US$90 a barrel.
Diesel has skyrocketed, with Reuters reporting that the US diesel crack, a key measure of refining profitability, hit an all-time high of US$102.20 a barrel on Monday (local time). Before the war, hovered around US$15 and US$35 per barrel.
Global diesel stockpiles have been under immense preassure, particularly due to the wars in the Middle East and Ukraine.
Speaking to BNZ Business Breakfast, Pickering Energy Partners founder and chief investment officer Dan Pickering said that while oil prices were high, "diesel prices are really high".
He said multiple countries had experienced outages in refining capacity – particularly in the Middle East, Russia, and China.
Pickering said the price increase for diesel had been "even more significant than the rise in oil prices".
"That's also going to matter because diesel moves a lot of goods around the world," he said.
'This is going to take a while to resolve'
The oil market has been volatile since the US and Israel first launched attacks on Iran in February. At the centre of the conflict is the Strait of Hormuz, a vital corridor for oil exports from the Middle East.
Pickering said that while some vessels were getting out, "we're still seeing a reduction in the amount of oil available to the market".
"Off their recent lows, we've seen quite a rally back up to the Brent $90 barrel range. And I think we're going to be around this level for a while.
"This is going to take a while to resolve, and inventories globally are starting to get tight."
For the US market, oil and diesel prices were likely to "sneak into" higher inflation numbers, potentially impacting interest rates.
Pickering said the big thing to watch was how much traffic was going through the Strait of Hormuz.
"I think we watch this refining capacity to our prior point, and then we see if there's any change in tone around whether we're actually moving to a peace deal as opposed to sort of this interminable squabble."
SHARE ME