We’ve also been asked what is the correlation between crude and petrol & diesel prices.
Please see the below explanation that details the current situation in more detail;
It is interesting to look at the less-understood market drivers that are having an impact on the price of fuel. The first factor is the complete (and again unprecedented) dislocation of refined petroleum prices from the crude oil price.
Traditionally there is of course a correlation between (say) petrol/heating oil prices and crude, but they are still individual markets, each with their own separate supply and demand dynamics. The “crude market” is made up of oil producers (the suppliers) selling their product to refiners (the demand). This is a very different set-up to the “products market”, which sees refineries making usable products (petrol, diesel, kerosene) which are then supplied to the end-user (consumer demand).
As Middle-Eastern and US producers increase their oil production to fill the gap left by Russian sanctioned oil, the pressure is beginning to come off the crude market. At the same time, the story couldn’t be more different on the product side of the equation. Here, there are huge gaps in production capacity because so much refined product was coming from Russia pre-invasion. For example, around 40% of European diesel in 2021 was of Russian origin and that product-flow has now either ceased or has significantly slowed. Simply increasing European refining capacity to produce more diesel (using manufacturing kit that is typically over 50 years old) is no easy task and as a result, an entirely predictable chasm between supply and demand has opened up. For the moment, Europe is massively reliant on diesel from the likes of India, whose refineries are making both a fortune and a mockery of the western sanctions regime. This is because they are buying heavily discounted crude from Russia and then selling it at record refined prices to the European countries, that are sanctioning the very same product from Russia.
Unfortunately, we cannot do anything to effect the wholesale price of refined products however, we will do all we can to keep our prices as competitive as possible.