Gas prices are out of control, but the situation with one specific type of gas, diesel, is perhaps most concerning due to the serious implications of it running dry.

An absolutely critical fuel for maintaining “just in time” delivery of goods and services all around the world, diesel could disappear from some areas of the world due to sanctions against Russia over its invasion of Ukraine.

The heads of one of the largest commodity trading houses and the biggest independent oil trader spoke at the recent FT Commodities Global Summit in Lausanne, Switzerland, revealing that as many as three million barrels of oil and its products a day could be lost due to sanctions against Russia.

Aligning with previous estimates, the global markets for diesel could face a major squeeze, with Europe being most at risk of a “systemic” shortage of diesel that could lead to fuel rationing.

“The thing that everybody’s concerned about will be diesel supplies. Europe imports about half of its diesel from Russia and about half of its diesel from the Middle East,” said Russell Hardy, chief of Switzerland-based oil trader Vitol. “That systemic shortfall of diesel is there.”

Diesel shortages are a global problem, not just a European problem

About 15 percent of Europe’s diesel comes from Russia, according to the FT. This poses serious problems for European supplies as the United States and its North Atlantic Treaty Organization (NATO) allies continue their crusade against Vladimir Putin.

Refineries could boost their diesel output in response to higher prices, but this would come at the expense of other oil-derived products. Rationing, Hardy said, is still a strong possibility.

“Diesel is not just a European problem,” noted Torbjorn Tornqvist, co-founder and chair of the Geneva-headquartered Gunvor Group. “This is a global problem. It really is.”

European gas markets are no longer functioning properly, he added, as traders face huge demands from banks for cash to cover their hedging positions.

“I think it’s broken,” Tornqvist said. “It really is. I never thought that somebody could say, ‘Ah, gas has fallen below €100 per megawatt hours, it’s really cheap.'”

Before Russia’s invasion of Ukraine, Europe’s wholesale gas price was about €70 ($76.8) per megawatt hour. At one point, it reached about €230 ($252.5) per megawatt hour, and has since slid below €100 ($109.8) per megawatt hour.

Europe’s largest energy traders are now calling on governments and central banks to provide emergency liquidity to cover their bets amid sharp volatility in the energy markets.

“Hardy said that to move a cargo equivalent to one megawatt hour of liquefied natural gas priced at €97 ($106.5), traders must provide €80 ($87.8) in cash, straining their capital requirements,” reported Zero Hedge.

Fulfilling Europe’s gas storage requirements for next winter amid all this chaos will be tough, especially given the “paralyzed” state of the spot market for gas – that is, unless lawmakers intervene to shield buyers against price swings.

“The diesel market is extremely tight,” said Trafigura CEO Jeremy Weird. “It’s going to get tighter and will probably lead into stock outs,” meaning fuel stations are eventually going to run dry.

Numerous other CEOs expressed similar sentiments about gas stations running dry of diesel, which is when all hell will really break loose for the global economy, which relies on diesel for just-in-time delivery of consumer goods.

“Needless to say, without diesel, not only will traffic in Europe grind to a halt, but much if not all U.S. truck-based logistical support and supply chains will soon be paralyzed,” Zero Hedge warned. “The consequences for the global economy will be dire.”

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