Europe's diesel futures benchmark surged to its highest level since 2022 on Thursday, as the ongoing US-Israeli war on Iran continues to strangle global refined fuel supply.
Futures traded as high as $1,493.25 a ton, exceeding $200 a barrel, rising as much as 9.4% in London trading.
The immediate trigger is the near-total halt to traffic through the Strait of Hormuz, through which approximately one-fifth of the world's daily oil supply and a significant share of liquefied natural gas (LNG) normally transits.
With the waterway effectively closed, flows of refined products, including diesel, have been blocked, while the broader impact on crude is forcing some refiners to throttle back output. Traders worldwide are scrambling for supplies, diverting shipments onto longer, costlier routes.
Europe's structural vulnerability
Europe is structurally exposed to the disruption, since the continent generally produces less diesel than it consumes, and the bloc is more dependent on refined fuels such as diesel and jet fuel from countries including Saudi Arabia and Kuwait, leaving it vulnerable to refinery disruptions.
The weighted average diesel price in the EU has surged by 20%, with the fuel now reaching EUR 2 per litre on average.
The largest increase has been observed in Spain at 27%, reaching EUR 1.79 per litre, while the highest price has been recorded in Ireland at EUR 2.30 per litre. Diesel has also exceeded EUR 2 per litre in Germany, Finland, France, Italy, and the Netherlands.
April shortages looming
Several traders and analysts have warned that Europe faces supply shortages within the coming weeks if the strait is not reopened, with similar pressures also expected in Latin America.
Shell CEO Wael Sawan warned that countries across Europe will begin to feel the full impact of the Strait of Hormuz closure in April, as the last tanker shipments loaded before the war began arrive and existing reserves start to deplete.
The European Central Bank has warned that a prolonged war will likely trigger a period of stagflation and push major energy-dependent economies, including Germany and Italy, into technical recession by the end of 2026.
Chemical and steel manufacturers have already imposed surcharges of up to 30% to offset surging electricity and feedstock costs.
Governments across the bloc are beginning to implement emergency measures. Italy is allocating EUR 100 million to support the transport industry in 2026, while Greece is considering a multi-million-euro support package, and Spain has reduced VAT to ease transport operator cash flow. Slovakia and Slovenia have introduced rationing at the pump, while France has removed its winter diesel requirements in a bid to boost national diesel production.
Source:Websites
