Quoting for continuity and adding:
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Indeed, no one could have predicted that! Except…
This is a funny interpretation of the events that we had already somewhat discussed:
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The author tries to show that there is no effect on diesel prices from the Ukrainian strikes. He is basically saying that Russian diesel does not matter. Even though the proposition is completely bonkers, let’s take a (very brief) closer look.
On his chart, Marc highlights the point in the middle of November, when Ukraine hit six RU refineries in a few days. Somehow - must be a miracle - diesel prices went down a couple of weeks later. Hmmm… Interesting, the lemming sense must be correct, there is no correlation! In reality, however, prices started going down because Russian exports of diesel began increasing and increased dramatically due to the drop in domestic demand and other factors, recording about 1 mbpd in
December. Too far to dig or understand for this guy, but let’s continue.
So the price was gradually decreasing up until the middle of January or so for this very reason, until the Russian exports actually began to drop due to the ongoing Ukrainian strikes over the previous months. Eventually, the diesel price came back to… drum roll… the level we had seen before this Russian increase in
seaborne exports. The chart illustrates this perfectly, in spite of being compressed (over the timeline) for propaganda purposes. It should be noted that there was no sudden price hike because there was no sudden shortage yet, information flows slowly (the exports volumes reports are not real-time info), there was uncertainty about the damage, repair times, etc, plenty of tankers were still at sea at any given time heading to their destination (or looking for one), softened demand, etc.
Then, at the end of February, Benjamin and Donald decided to wreck Iran, that, in turn, announced the Strait to be closed and sent some projectiles at the Gulf oil related infrastructure. Of course, market reacted immediately because, while Russian exports kept flowing at about 500 kbpd, the Gulf crisis was heading towards taking out nearly double that amount out of circulation in the near future - “the crisis we have not seen since the 1970s”. Lemming logic somehow can connect these events, weirdly distinguishing one diesel from another.
As things evolved, Benjamin and Donald (mostly Donald) had a revelation that things were not working out the way he thought they would, so tensions reduced, prices began to drop, naturally. Trump’s messaging, memorandum of understanding, and all that jazz.
Come mid or so June, speculation and Russian signalling about the potential diesel export ban (the direct result of the Ukrainian strikes) caused the upward pressure on diesel prices. This is still greatly illustrated in the chart that is not supposed to illustrate that. On July 8, shit hit the fan. The ban was implemented exactly on that day and strikes in the Middle East resumed, with blockade coming a week or so later.
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Russian ban immediately and clearly, with utmost certainty, meant that over 400,000 barrels of diesel would disappear from the market in the near future. What was not certain was the longevity of the ban, though it was more or less predictable that, provided the UA strikes continued, the ban was to be extended to the end of the harvest season, even if there was marginal excess production. In other words, Ukrainian strikes on Russian refineries had a direct effect on the Russian diesel production capacity, which affected the volume of exports, which is directly (negatively) correlated with global diesel prices.
Someone should play around and build a chart where the effects on the US diesel price (as per the chart cited) of the Iran war were eliminated, while all else remained equal. Ideally, someone who can put aside their bias and has an understanding of causation and basic statistics. If I were to take a wild (though educated) guess, the total change in diesel price here was 30-40% effected by the RU exports and, naturally, 60-70% caused by the war with Iran. The correlation between the diesel prices and Russian exports would be nearly perfect.
The whole idea of differentiating between diesel that originates in Russia, Middle East or elsewhere is retarted. It is barrels that matter, not their origin (unless we want to expand the discussion to regional pricing an their dependency on Russia, Middle East, etc).
