- Goldman Sachs' commodities research department warns that if U.S. commercial diesel inventories continue to deplete at the current rate, by August this year, the supply capacity may reach a critical threshold of only 20 days' worth of supply.
- Due to geopolitical conflicts in the Middle East causing the Strait of Hormuz's transit volume to plummet to 10% to 15% of normal levels, the U.S. has recorded the largest diesel inventory decline on record over the past eight weeks.
- Since late February, the average retail price of diesel across the U.S. has risen by 45%, surpassing $5.43 per gallon. The high costs of fuel and fertilizers have begun to significantly suppress demand for downstream agricultural machinery and other physical manufacturing needs.
Blockage of the Strait of Hormuz Triggers Historic Supply Decline
Daan Struyven, co-head of global commodities research at Goldman Sachs, stated that the worsening geopolitical situation has nearly halted oil transportation from Persian Gulf oil-producing countries through the Strait of Hormuz, forcing the shutdown of millions of barrels of global crude oil capacity. The actual oil throughput of the strait has shrunk to 2 to 3 million barrels per day, only 10% to 15% of normal transport levels. This structural disruption in the commodity supply chain is transmitting to the global energy market at a pace exceeding market expectations, causing U.S. diesel inventory levels to drop to their lowest since 2003.
Diesel Days of Supply Approaching Critical 20-Day Warning Threshold
According to high-frequency supply data, U.S. commercial diesel inventories are under significant outflow pressure. As of the week ending May 22, the days of diesel supply in the U.S. have rapidly decreased from 36 days at the end of January to about 28 days. The Goldman research team noted that the past eight weeks have witnessed the most severe inventory decline in U.S. supply history. If the blockage issue persists into the summer and U.S. refiners cannot further adjust capacity or use unconventional reserves to fill the gap, the potential supply turning point will accelerate in August, with inventory days possibly falling below the critical 20-day threshold.
Retail Prices Surge, Impacting Downstream Real Economy
The marginal tightening of energy supply is fully reflected in prices. Data from the American Automobile Association (AAA) shows that since February 27, the average retail price of diesel in the U.S. has surged by 45% in a short period, now exceeding $5.43 per gallon. This surge in basic energy costs is negatively impacting downstream manufacturing along the industrial chain. Deere & Company (DE:US), the world's largest agricultural machinery manufacturer, has attributed the sluggish sales of tractors and other heavy agricultural machinery to the dual rise in fuel and fertilizer costs faced by end-users in its latest business outlook.
Increased Blind Spots in Shipping Routes Complicate Global Energy Assessment
When evaluating subsequent market developments, the transparency of supply-side data is declining. Currently, ships passing through sensitive sea areas often choose to turn off their transponders, posing significant challenges to traditional shipping positioning and capacity statistics. To compensate for this data blind spot, international financial institutions, represented by Goldman Sachs, are turning to cross-verification by tracking destination port data and changes in commercial inventories of core consumer countries. Analysts assess that if core inflation rises again due to a continued rebound in energy prices, the policy paths of major global central banks and asset pricing in financial markets may need to be recalibrated.
