Global fuel supplies are running low, and high prices could persist for years

World oil reserves are depleting, with high fuel prices likely to persist for years Global oil stockpiles are dwindling, and high fuel prices could remain elevated for years due to ongoing supply constraints and refinery capacity limitations. Although crude oil prices have slightly eased after peaking during the war in the Middle East, refined fuels such as diesel and gasoline continue to face intense pressure. The issue is no longer solely about the availability of crude oil but primarily revolves around the shortage of refining capacity and the depletion of fuel stocks. In Slovenia, the government is seeking solutions to alleviate the burden on consumers while advocating for greater flexibility in taxation policies within the European Union. The global oil market has undergone one of its most severe disruptions in recent years. The war in the Middle East and reduced traffic through the Strait of Hormuz have significantly impacted crude oil supplies and, especially, the refining of petroleum derivatives. In the latest analysis by Reuters, the consequences extend beyond just the movement of crude oil prices. The global refining system is under immense strain, with fuel stocks declining. As a result, high prices for diesel and gasoline could persist long after any resolution to conflicts. Crude oil prices have risen sharply, yet this increase has not been evenly reflected in retail fuel prices. The reason is increasingly clear: the bottleneck lies in the refining process. According to data cited by Reuters, over a fifth of approximately 9.6 million barrels per day of refining capacity in the Middle East has been disrupted due to the war. At the same time, Ukrainian attacks have damaged Russian refining infrastructure, while Chinese refineries have reduced output by nearly 16 percent in July. This means that even a return to normal crude oil supplies would not immediately resolve the issue. Refineries require time to repair and restore operations, and the procurement of specialized parts and equipment can take months. Diesel has become particularly problematic. Mid-August saw the U.S. diesel crack spread, the difference between diesel price and crude oil price, reach a record high of $102.20 per barrel, surpassing the previous threshold of $100. Global production of refined fuels was approximately five million barrels per day lower than the previous year in July. Europe is especially vulnerable to diesel shortages. Reduced production in the Middle East and Russia increases competition for the remaining available supplies. This issue extends beyond motorists. Diesel plays a crucial role in road transport, agriculture, construction, and logistics. As diesel prices rise, so too do transportation costs, production expenses, and service delivery. Consequently, even consumers who rarely use cars may feel the impact through higher food and other product prices. Global security stocks are thinning. These reserves were initially a buffer during the early stages of the conflict but are now rapidly decreasing. If refinery production continues to decline, the pressure on prices will intensify further. The European Central Bank has warned that refining costs and margins played a significant role in the energy crisis. Its calculations show that refining and distribution costs and margins contributed about 35 cents per liter to diesel prices in the eurozone in early July. While the bank notes that refining margins might begin to ease in the coming months, much will depend on developments in the Middle East and the restoration of refining capacities. Slovenia is not immune to these effects. The impacts of the global crisis are already visible in fuel prices. The government has implemented several measures aimed at limiting the transfer of the global energy crisis to households and businesses. Among other actions, it has lowered taxes, regulated retail prices, and limited commercial margins. In July, the government estimated that it has almost fully utilized the maneuvering space allowed by current legislation. However, the government acknowledges that additional steps may still be necessary to address the ongoing challenges.