Jeff Currie: Watch China as it takes advantage of record margin between crude & diesel

• US diesel hit an all-time high of $5.90/gallon, with Brent trading significantly below implied refining margins.
• Ukrainian drone strikes on Russian refining capacity (over 50% at one point) reduced global diesel exports by 10%.
• China's refining capacity is driving up diesel prices, and Shanghai crude futures trading over $100/barrel indicates China is capitalizing on the crude-diesel profit margin.
• OPEC+ kept October output unchanged, but its influence is limited by a lack of spare capacity, with re-establishment of capacity and alternative routes being a long-term (2027) prospect.

Jeff Currie highlights the impact of the Russia-Ukraine war on global diesel supply and China's significant role in oil markets. He notes record-high US diesel prices and suggests that China's refining capacity is driving up diesel prices while it takes advantage of the crude-diesel margin. OPEC+'s diminishing spare capacity further complicates the global oil outlook.