ECB's Vujcic warns diesel prices may fuel euro zone inflation
Says elevated diesel prices, driven by shrinking refining capacity and supply disruptions, could feed into broader inflation.
(Adds detail and context in paragraphs 2, 4-6) FRANKFURT, Sept 25 (Reuters) — Diesel prices are likely to remain elevated because of shrinking global refining capacity, threatening to push up broader inflation across the euro zone, European Central Bank Vice President Boris Vujcic said on Friday. Diesel prices have surged to record highs as conflicts in the Middle East and Ukraine disrupt supplies, adding to inflation pressures in the fuel-importing euro zone and complicating the ECB's efforts to keep price growth under control.
"Energy prices, particularly diesel, will probably stay high for long and that will feed into inflation because diesel is really in many products," Vujcic told an event at the Federal Reserve Bank of Cleveland. He said drone attacks on Russian refineries had curbed supply, while the Iran war was disrupting traffic through the Strait of Hormuz and Chinese refiners appeared to be prioritising domestic demand over exports. The diesel market, already squeezed by supply disruptions linked to the conflicts in Ukraine and the Middle East, was jolted anew this week when US President Donald Trumpvoiced support for a potential ban on US diesel exports.
The US administration later sought to play down that prospect. net)