If the diesel shortage persists, the Swedish price may rise from around SEK 22 to over SEK 25 per litre. If the temporary tax cuts disappear at the same time, the price can approach SEK 28.
- Between SEK 25 and 28 per liter is within reach, says commodity analyst Christian Kopfer at Arctic Securities.
Diesel is a key fuel in the world economy. Trucks, agricultural machinery, mines and industries consume several billion liters every day. When the price of diesel rises, it therefore hits transport, food and industrial production.
Behind the price rise are two geopolitical conflicts. The war between the US and Iran has severely restricted traffic through the Strait of Hormuz. Ukraine's attacks have knocked out parts of Russia's refinery capacity, prompting the country to halt diesel exports.
- There is a shortage of both crude oil and diesel, says Christian Kopfer.
The difference between the price of crude oil and the price of finished diesel is called the "crack spread". Last week, it passed 100 dollars per barrel in southern Europe for the first time, writes the Financial Times.
Ukraine's attacks reinforce the difference. According to the Bloomberg news agency, Russian refineries were attacked at least 21 times in August, more than in any previous month. Russian diesel production then fell by more than 23 percent. Russia, normally one of the world's largest diesel exporters, has now paradoxically run out of fuel and has been forced to import diesel from Asia, reports Reuters.
Since the Iran war began in February, the US government has repeatedly said that the Strait of Hormuz will soon be opened. The announcements have depressed oil prices, even as Iran has denied that negotiations are underway. But what if the opening doesn't come?
- If the world consumes 100 but only produces 95, the remaining five must be taken from somewhere. Now they are taken out of stock. In the end, the price must force consumption away, says Christian Kopfer.
Russell Hardy, CEO of Vitol, the world's largest independent oil trading company, was recently interviewed by Reuters. Vitol believes that there is a shortage of around four million barrels of diesel per day on the world market. This corresponds to an excess consumption of 630 million liters of diesel per day. The price information company Argus Media makes a narrower calculation and estimates the loss in international trade at 1.3-1.4 million barrels a day.
US refineries are already approaching their maximum capacity. During the autumn, several European refineries are also temporarily closed for maintenance, reports the Financial Times, while demand normally increases during the winter months. The deficit is covered so far by depleting the world's strategic stocks of crude oil and diesel.
- There is no special day when you drive straight into a rock wall. It's more like a patient being slowly drained of blood. It's slowly but surely getting worse, says Christian Kopfer.
For private drivers, higher fuel prices mean fewer trips or switching to an electric car. For haulage companies, agriculture and mines, the situation is more difficult. More expensive diesel raises the cost of growing food, mining ore and transporting goods. Sweden's large refinery capacity does not provide complete protection. The world market also sets the price for the diesel produced here.
The Swedish protection has instead been political, which is extra sensitive just a few days before the election. A temporary tax reduction ends on 30 September and a further reduction in the carbon dioxide tax applies until 30 November. The parties promise more money for households, but if the price of diesel continues to rise, some of the additions risk being eaten up by more expensive transport.
- A continued diesel shortage increases the risk of stagflation, higher inflation and low growth, says Christian Kopfer.
Christian Kopfer still believes that the oil trade will be restored. The economic drivers for opening Hormuz are enormous. Iran needs the export earnings, the Gulf states need free shipping and the US wants to bring down fuel prices and inflation. A continued stop becomes more and more expensive. But so far the war has defied economic logic.
