Oil Supply Outlook Worsens, Threatening Fertilizer and Transportation Costs

The International Energy Agency warned Friday that global oil supplies could decline by approximately 5.7 million barrels per day in 2026, considerably more than previously forecast because of disruptions involving Middle Eastern producers.

Saudi Arabian production reportedly fell to around 6 million barrels per day in August, its lowest level in more than 30 years.  West Texas Crude was trading above $102 a barrel Sunday, while Brent crude was closer to $108...both markers were up nearly 3% in weekend trade.

The implications extend well beyond farm diesel.

Petroleum and natural-gas markets influence fertilizer manufacturing, agricultural chemicals, grain transportation and food-processing costs.  Higher energy prices also are increasing inflation concerns and pushing interest rates higher, potentially increasing borrowing costs for farmers already carrying more expensive operating debt.

Industry experts noted for agriculture, the situation presents an unusual combination: higher production costs but potentially stronger ethanol and renewable-fuel economics.

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