(Sept 29): Asia looks to be better positioned than Europe to weather an emerging global diesel crunch, with the Trump administration weighing export curbs that could tighten supplies of the key fuel even further.

Spot cargoes delivered into Northwest Europe are increasingly more expensive than in the main Asian refining and trading hub of Singapore, according to a Bloomberg analysis of General Index data. The widening differential — which averaged about US$174 a ton so far in September, from US$27 in May — reflects the relative strength of the two markets, and takes freight into account.

The global market for diesel — used to power trucking, farm equipment and industry — is acutely tight following seven months of war in the Middle East, as well as a prolonged shipment ban imposed by Russia after waves of Ukrainian drone attacks on refineries. With pump costs hitting records in America, President Donald Trump has mulled a ban on US exports, with analysts warning that such a move could supercharge overseas prices, especially in Europe.

Refiners across Asia have already been able to secure much of their crude oil feedstock for the coming months, so they’ll be able to keep making fuels even with continued disruptions to shipping in the Persian Gulf. Among producers, India has said it intends to keep honoring overseas contracts for diesel, while China — typically a major exporter — has eased curbs on flows seen earlier in the conflict. Elsewhere, Japan’s exports may also rebound.

“Based on current refining operating rates and crude availability, there are no major issues with diesel supply in Asia,” said June Goh, senior oil market analyst at Sparta Commodities SA. “In fact, the likelihood is for Asia supporting Europe with diesel exports if Trump really bans US exports.”

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