Forgive me for the equivalent of news snippets, as these items overlap with linked terrain. But the energy crunch triggered by Russian sanctions appears to be affecting Europe and the United States sooner than most sources expected.

The first is the diesel shortage, which we warned about almost from the start. Russian natural gas is heavier than frac natural gas or Saudi light sweet crude. Heavier means more long-chain hydrocarbons with higher energy density. Lighter grades are available to make diesel…but at the cost of gas you probably want to have too.

We have pointed out that diesel shortages are so imminent that the IEA is now recommending aggressive energy saving measures, such as more work from home, more ride-sharing services, and less air travel, to lessen the severity of the crunch they expect to see in the coming in four months.

The news on the diesel side is only going to get worse.Starting with the first of two closely related stories about OilPrice, a Europe faces systemic diesel supply crunch:

Europe faces the risk of a “systemic” shortage of diesel supplies that could worsen and even lead to fuel rationing, an executive at the world’s largest independent oil trader said on Tuesday.

Gunvor chief executive Torbjorn Tornqvist told the Financial Times Commodities Global Summit: “It’s a global issue, but it’s very difficult for Europe because there’s a huge shortage of diesel in Europe”. Bloomberg.

European diesel Shortages are getting worse Tornqvist added that as Russian refineries began to cut refinery output.

Global diesel inventories were low even before Russia invaded Ukraine, but shortage Now, this is exacerbated by falling global diesel supplies in Russia.

In highly volatile global energy markets since the outbreak of the Russian-Ukrainian war, even the biggest traders exposed Increase margin call. Through commodity futures contracts, trading firms hedge their risk. Without commodity derivatives, many traders would not be able to move physical quantities of oil.

The European Energy Traders Federation (EFET), whose members include Trafigura, Vitol, Shell and BP among others, has urged the ECB to provide “emergency liquidity support for a limited time to ensure wholesale gas and electricity markets continue to function,” FT report Last week, a letter sent by the federation earlier this month was cited.

The potential for a derivatives shock to bounce back into the spot market is a fresh angle, but after the LME cancels a day of nickel trading so as not to blow up the exchange or too many big fish, don’t underestimate what will be done to keep what is deemed too critical. The dynamism of institutions and participants that cannot fail.

A more specific wrinkle in the diesel extrusion story mentioned above is Diesel shortage deepens, Russia cuts refinery output:

Trade with Russian diesel has become scarcer as European buyers shun Russian cargo…

Gunvor says buyers’ ‘self-sanctions’ have started forcing Russian refiners to cut output [CEO Torbjorn] Tornquist.

“What does that mean? It means exporting more crude oil than product, which we don’t think is possible and would lead to a cut in Russian production,” Bloomberg reported.

Global diesel inventories were low even before Russia invaded Ukraine.Diesel fuel stocks in Europe, according to Reuters John Kemp estimates Lowest since 2008and is 8% (or 35 million barrels) below the five-year average for this time of year.

In the United States, the situation is even more dire. There, diesel fuel inventories were 21%, or 30 million barrels, below their pre-pandemic five-year seasonal average.

In Singapore, the global energy trading hub, diesel fuel inventories were 4 million barrels below their pre-pandemic five-year seasonal average.

In addition to exacerbating a global diesel supply crunch, the sanctions on Russia could force Russian companies to shut down some crude production, analysts said.Russia will have to close Standard Chartered said earlier this month that some of its oil production would not be able to be sold elsewhere from the European market as Russian crude production fell and remained subdued for at least the next three years.

So even energy and other commodities that the sanctions were originally designed to exclude, anything deemed necessary to stay away from Russia would cause considerable pain. However, while the impact is widely acknowledged in the business press, there seems to be little will to do anything about it.

RT has a How a key pipeline to Europe was damaged This will make the energy crunch worse for the next three weeks and beyond. Hat tip Kevin W:

The Caspian Pipeline Consortium (CPC), one of the world’s major pipelines, was forced to suspend operations… According to experts, the shortage of oil on the world market is expected to increase significantly due to the event.

The pipeline, which carries about 1.2 million barrels a day of crude oil from Kazakhstan to Europe and the United States, said in a statement that the condition of the two hoses did not allow “the safe operation of the equipment.”

“We have to eliminate any risk of oil entering the sea, so, of course, the equipment will be decommissioned for preventive maintenance,” explained CCP director-general Nicola Gorban.

Repairs to each damaged float hose – which should be done one after the other rather than all at once – would take at least three weeks, he said. However, weather conditions are still a major factor affecting work schedules…

“In this case, the management of the consortium has to report on the shipper’s request, and in the near future, oil shipments may be reduced by a factor of three,” said the pipeline, which is jointly owned by Russia, Kazakhstan, and some major international oil market participants, said in a statement.

Temporary disruption to operations of one of the world’s largest pipelines will affect many people, especially consumers in southern Europe – Italy, Spain and southern France traditionally receive oil from remote moorings of affected CPCs, experts from the Russian University of Finance and Igor Yushkov, chief analyst at the National Energy Security Fund, said…

Apart from southern Europe, the CPC incident could be an “unpleasant event for the United States,” Yushkov said.

“About 10-15% of the volume[from this terminal]goes to the US market. It is also an unpleasant event for the US – they have just rejected Russian oil, they need to find an alternative supplier and then another Suppliers have disrupted supplies. So, therefore, fuel prices in the US domestic market may rise,” experts say…

“If this event coincides with other factors, a perfect storm could come and prices could soar to $140-$150 a barrel,” he said.

Another expert, Kirill Rodionov, from the Institute of Technology Development of the Fuel and Energy Complex, stressed that the good news in today’s news is that the problem is only temporary. According to his calculations, “CPC will resume the same amount of oil shipments starting in the third quarter.”

The pipeline operators have dutifully made a sincere voice about how sorry they are and how they will resolve all issues as quickly as possible. The article also says that the pipeline will return to its original delivery levels in the third quarter, so don’t worry. But it’s not the lack of aversion to gas and oil that goes through pipelines that’s worth noting, though. Out of sight out of mind?

Finally, we join many others in warning about the impact of automotive production, such as platinum used in catalytic converters, and rare earths and other metals used to make green energy generators such as wind turbines and related infrastructure such as batteries.

The battery crunch began, first in the form of higher price rations. From another OilPrice piece, Chinese EV maker says soaring battery costs ‘ridiculous’:

Electric vehicle battery prices are rising “ridiculously” against the backdrop of soaring raw material prices, and automakers will soon have to raise prices if they haven’t already, an executive at Chinese EV maker Li Auto said. . company……

CATL, the world’s largest battery maker, has announced in a statement today due to rising raw material costs Reuters It has raised the price of some batteries, but did not provide further details on the price increase.

China’s Li Auto has yet to announce a price increase for its electric vehicles.

Raw material and logistics costs have risen Give Tesla a raise Its prices are for China and the United States. This month, Tesla raised prices for the second time in less than a week.

The cost of raw materials and key metals such as nickel and lithium for electric vehicle batteries has soared since Russia invaded Ukraine in late February…

Lithium price soared even before Russia’s war in Ukraine. Lithium prices hit record high in early 2022…

Now that the war in Ukraine is accelerating the rise in metals and minerals, soaring metal prices for batteries and all other parts of the car, including aluminum, are already starting to translate into higher EV prices, potentially slowing EV adoption.

The upside is that the commodity price crunch will lose some momentum in Elon Musk’s sails. But smaller fry are affected.