Over the past half a month, international oil prices have fallen by more than 8%. However, due to a serious shortage of domestic refining capacity, gasoline and diesel prices at British gas stations are setting new records every day. Driven by soaring oil prices and commodity prices, UK inflation hit a staggering 9.1 per cent in May, a 40-year high.

Zhitong Financial APP noted that energy analysts generally believe that the main problem in the global oil market is the bottleneck of the refining system, which is an important issue that countries around the world must deal with, not just the UK.

For more than 50 years, few companies have built large refineries in the UK, and many have closed, reflecting a trend observed by analysts in Europe and other industrialised countries. that is, these countries have largely outsourced fuel production to Asia, the Middle East and other regions for decades. Their assumption is that if we need fuel, we can buy it directly.

In the UK alone, after several refineries have been closed, statistics show that refinery capacity has fallen by about 35 per cent from its peak. This is especially true in other western countries, where inefficient refineries were permanently shut down in 2020 when the global COVID-19 epidemic broke out, especially in the United States and some European countries, accelerating the already existing trend. However, when demand for crude oil rebounded sharply, these refineries were no longer able to produce finished fuel.

Since last year, the supply of crude oil has not kept pace with the growth in demand.

As new facilities begin to be built one after another, oil refining bottlenecks in western countries may begin to improve this year. Just a few months after Britain and the European Union banned imports of crude oil and fuel from Russia, there is an urgent need to stockpile fuel to cope with the cold winter and possible future energy crisis. but few regions have the capacity to fill such a huge gap.

Even if western countries impose unprecedented sanctions on Russia, Russia is still an important supplier of crude oil and fuel, especially diesel fuel, to the European continent. According to the EU sanctions against Russian crude oil, the shipping ban on Russian crude oil will be implemented in phases, and the current plan is to take effect in December. In terms of specific transactions and reality, there are only a few months left in winter.

Russel Hardy, chief executive of Vitol Group, the world's largest independent oil trader, said in an interview with the media this week: "what Europe is really worried about this winter is diesel fuel." "concern about diesel is one of the real drivers of prices."

Today, insufficient refining capacity in Europe and the United States has led to a sharp rise in fuel prices in these regions. But there is another problem that has to be considered: when Europe and the US cut refining capacity as demand falls again, the profit margins of new refineries will fall sharply because crude oil prices are likely to rise faster than finished fuel prices.

In terms of fuel inventory, statistics show that inventories in Europe and the United States have been on a downward trend, mainly due to the increase in the number of idle refineries. It is understood that some large oil companies have closed their refineries and have not yet resumed production plans, so fuel stocks are on a downward trend.