The oil shock moves downstream

According to Business Recorder, the strain from the global oil shock is now showing up mainly in diesel, refining margins and the fuels that keep goods, farms and factories running. Brent stood above $105 a barrel on Thursday, and hopes of a swift end to the US-Iran conflict stayed weak. Some crude flows have adjusted, with Saudi Arabia restarting its East-West pipeline and Iraq raising exports, yet prices have eased only at times.

Global diesel supply has tightened as the Iran conflict and disruptions at Russian refineries cut output from two major exporting regions. Stocks have dropped, refinery outages have worsened the shortage, and refining margins have climbed to record levels. The diesel premium over Brent reached around $95 a barrel in Europe, while the US premium touched a record over $119 a barrel, and Asian margins have also reached record highs.

Because diesel powers trucks, farms and construction sites, higher prices quickly lift transport, agricultural and industrial costs. For Pakistan, high-speed diesel has a broad role across freight, agriculture and industry, so a fall in Brent alone may not quickly ease domestic cost pressures if global margins stay elevated. Refining capacity is harder to adjust than crude output, and plants hit by outages can need weeks before returning to full output. Industry estimates suggest diesel tightness could persist until 2027.