Russia diesel export ban tightens global supply, pushes prices up; US gas average hits $3.88
Russia banned diesel exports, and the global supply crunch that followed is now pushing prices up, according to Global Banking & Finance Review. For haulers and jobbers, it is worth watching this week. Pull one of the world's larger diesel exporters off the water and the barrels have to come from somewhere else, which tightens the whole market and works its way into US wholesale racks.
The timing is awkward. The national average for gasoline hit $3.88, with reporting tying the climb to geopolitical uncertainty, and drivers are already feeling it at the pump.
Oil prices fell as the US and Iran kept up technical talks after renewed strikes, World Oil reported, even though tanker traffic through the Strait of Hormuz stayed below normal. So crude is softening on the diplomacy while product prices, diesel especially, hold firm on the Russian ban, and that spread will shape refiner and marketer margins over the next couple weeks.
Blarney Castle's 20 stores
Blarney Castle Oil & Propane, out of Bear Lake, Michigan, agreed to buy all 20 of Fleming Oil Co.'s convenience stores in Michigan. American Business Brokers & Advisors represented Fleming, which Jess Fleming started in 1934 as a small fuel delivery operation in South Haven before it grew into a diversified fuel and c-store business.
Twenty sites changing hands in a single state is a real consolidation move. Family jobbers who built c-store networks over generations are selling, and the buyers are other regional fuel marketers with the balance sheet to fold them in. If you operate in the Upper Midwest, expect a bigger, better-capitalized competitor across more corners.
Earnings and the pump
Higher crude is expected to boost second-quarter earnings for ExxonMobil, Chevron and ConocoPhillips, but the same prices are raising political pressure on the White House ahead of November's midterms. The administration wants a strong energy sector and low pump prices at the same time, and those two goals are in tension.
Against that backdrop, Freedom Fuel Network opened its first Philadelphia station July 8 at $3.47 a gallon, roughly 41 cents below the national average and a nod to the 47th president, per a White House announcement. The company runs 25 stations across Pennsylvania and New Jersey and, the White House says, is privately owned and unsubsidized, holding the price down by cutting its own margin. One station at a thin margin is a marketing move, and it says nothing about actual supply.
What to watch
Whether the Russian diesel ban widens or gets carved out with exemptions, and how fast that flows into US distillate racks. The US-Iran talks and Hormuz tanker traffic, which could ease crude further if the strait stays open or reverse it if the strikes resume. Baker Hughes put the US rig count at 581, up 44 from a year ago, with oil rigs flat at 445, so drillers are holding back and not rushing to add barrels into a volatile market. And watch for more deals like Blarney Castle, because the family-jobber selling wave does not look finished.