Live News: Russia and Ukraine are close to reaching an agreement on the extension of the grain agreement

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Global diesel markets are “unusually tight”, the International Energy Agency has warned, adding that EU sanctions on Russian oil which will come into full effect over the next three months will increase competition for a limited supply.

According to the IEA, diesel prices and the relative difference with the price of crude reached record highs in October and are now respectively 70% and 425% higher than a year ago.

“High diesel prices are fueling inflation, adding pressure on the global economy and global oil demand,” the Paris-based IEA said.

Once an EU ban on imports of diesel and other refined products from Russia is implemented in February, the market will tighten further, he warned.

“Competition for barrels of non-Russian diesel will be fierce, with EU countries having to offer shipments from the United States, the Middle East and India to their traditional buyers,” he said. “Increased refining capacity will eventually help ease tensions over diesel. However, until then, if prices rise too high, further demand destruction may be inevitable for market imbalances to unwind. .

Diesel markets were already tight before Russia invaded Ukraine due to the shutdown of 3.5 million barrels per day of refining capacity since the start of the Covid-19 pandemic, the official said. ‘OUCH. Disrupted Russian shipments and below-normal Chinese exports have further reduced supply, as demand for fuel – a key driver of economic growth – has picked up this year.

High diesel prices, combined with a weak Chinese economy, Europe’s energy crisis and a strong US dollar, were “weighing heavily” on consumption, he said. Global oil demand is expected to fall by 240,000 barrels a day in the fourth quarter from a year ago, he added.

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