Crude retreats but fuel prices stay high

0:02Good morning from the Financial Times. Today is Friday, August 7th, and this is your FT News briefing. A refining crunch is keeping fuel prices high, and Google shifts control of its AI efforts to San Francisco. Plus, we take you inside a Haitian community where tens of thousands are facing deportation after the U.S. revoked their protected status. I'm Victoria Craig, and here's the news you need to start your day.

0:43Global crude oil prices have been well off their wartime highs, so you might expect prices to also come down for refined products that are made from crude. But that has not been the case. Diesel and petrol are trading close to record premiums over crude oil. For example, diesel currently costs$70 a barrel more than crude, And that is much higher than the usual$20 premium. Joining me now to discuss why fuel prices are staying high even as crude falls is Verity Ratcliffe. She's the FT's energy correspondent. Hi, Verity. Hi. So walk me through this. Why are the premiums so high? What's going on? Well, we often focus on crude prices.

1:25When we talk about oil, it's typically oil futures, it's Brent futures. But when we look at the refining sector, we have to consider the price of the input, the crude and the products that come out the other end. And at the minute, the difference between those two, the inputs and the outputs for some products are at record highs. And we've seen a different evolution throughout this conflict in the Middle East with different tightness and different products as time has gone on. It started more of a crunch on jet fuel. So a lot of the refineries pivoted and tried to produce as much jet fuel as possible.

1:58and now at the minute it's more motor fuels, particularly in Europe, particularly with diesel. And the premium for producing diesel in Northwest Europe reached a record high last week. So this is all down to refining capacity around the world specifically, right? How are these refinery operators responding to this situation? Absolutely, it's about capacity and a lot of that capacity is trapped behind the Strait of Hormuz. Some of the biggest refineries in the world are based there, But also with Russia, Ukraine has become much more effective at targeting some of those refineries in recent weeks and months.

2:35And that's taken out roughly the same amount of diesel production, for instance. So everybody's had to adapt. And the way in which they adapt is limited to a certain extent by the crews that they can produce. So some of the more complex refineries, typically in the US, where they don't have such issues of getting the crude feedstock, are doing particularly well at the minute because they can pivot to different types of fuel. You bring up the U.S., which has really sort of swooped in to provide that crude supply to these refineries. Could we see more of that if the war continues? Could we see a bigger reliance on American product?

3:12Absolutely. At the minute, they have been the ones, the biggest winners, I suppose, in this market. And they are well placed to take advantage of that so long as they can still secure the crude they need. The only issue is there's a hurricane season coming up. All that would need to happen to have big global disruption to oil product supplies would be for one or two units in the U.S. Gulf Coast to be affected. And that could really have knock-on impacts across the world. Globally, what needs to happen in order for prices to stabilize long-term? Since at the moment, it seems, as you said, there's just a focus on a minute-by-minute sort of demand for the kind of fuel that the world needs?

3:52Yeah, the first thing that could happen is that if the Strait of Hormuz reopens, then you have a whole flood of crude, but also products coming back out again. It's a little bit more difficult to sort out the issues with refineries in Russia because they've been attacked and that will take much longer to come back online again. The other thing that could happen, China is the only one really with spare refining capacity and also access to crude. If prices go particularly high and they decide to take advantage of that, they could free up their controls on oil products exports. And that would help consumers everywhere, but also potentially get them quite high price for selling those products.

4:35Really interesting stuff shows just how global this whole system is. Verity Ratcliffe, the FT's energy correspondent. Thanks so much for your time, Verity. Thank you.

4:50A quick update for you on a story we told you about yesterday. Google is shifting control of its artificial intelligence efforts from London back to Silicon Valley. Sources familiar with the matter say it's part of a sweeping leadership overhaul that will return influence to the company's co-founder, Sergey Brin. He had largely withdrawn from day-to-day operations, but has re-emerged as one of Google's most influential AI voices. The overhaul is a seismic shift for the American tech giant. The push to commercialize its Gemini model is outweighing the more research-led culture in parts of the company.

5:26Google is also facing mounting pressure to prove it can compete with open AI and Anthropic and justify the cost of its AI efforts.

5:40The end of a humanitarian program in the U.S. could affect more than a million immigrants across the country, and economists and business leaders are warning that the risk of mass deportations is likely to pose a big challenge for the U.S. economy. That's because employers in some parts of the country rely heavily on foreign workers who have also helped revitalize local economies. Ville's Dorsonville in Springfield, Ohio, is one of hundreds of thousands of Haitians who are unsure what their future in America looks like. It's a painful time for us now as a community, and it's very fearful, and folks are very panicked.

6:22The FT's Guy Chazan recently traveled to Springfield and joins me now to talk about the situation there. Hi, Guy. Hi, Victoria. So just remind us why these people are facing potential deportation. So this is all about a humanitarian program called Temporary Protected Status, which has existed in the U.S. since the 1990s. 90s. And essentially, it gives certain categories of people the possibility of remaining in the US if it is unsafe for them to be returned to their home countries, where there's been big natural disasters like earthquakes, political turmoil, and where it's just really not safe for them to go home.

7:04The status is granted on a temporary basis, but it's usually then renewed by the administration. But President Donald Trump and his allies think that these protections just keep getting extended. So it's become a pathway to permanent residency, which completely undermines the initial kind of justification for the program. So across the country, Guy, there are about 300 ,000 Haitian immigrants alone who are facing potential deportation. In Springfield, where you went, that number is 15 ,000. What happens to those people if they are forced to go back to their home country? Well, they're very scared because the thing about Haiti is that it's really unsafe.

7:49International organizations have been warning for many, many months, if not years, about a situation where there is gang violence, political turmoil, and the U.S. State Department itself has a level four travel advisory for U.S. citizens, which basically means do not travel to Haiti. And a lot of the people I spoke to in Springfield are just scared of the prospect of having to return. So a difficult situation, but still, Haitians in Springfield have also faced plenty of sharp criticism. Some locals say that the influx of so many people at one time brought a lot of problems like higher rent, traffic accidents, and infrastructure challenges.

8:35I wonder though, Guy, what their deportation could mean for the future of these cities. It's a good question because basically they have in many ways re-injected a bit of momentum into some of these communities. Springfield in particular, it's a city that was in real terminal decline. It's not only in the Haitian community where these concerns exist. Employers are beginning to sound the alarm. I spoke to one care organization called Arch Care, which is actually based in New York. Jason Hutchins, chief operating officer, explained the financial hit that that company has taken with the disappearance of Haitian workers.

9:19Staff were covering multiple shifts. So they often worked doubles. And what we ended up having to do, triple our sign-on bonus for certified nursing assistants in very short order in order to backfill all those positions. Obviously, we can't say that the Haitians are the sole reason why there's been some sort of revitalization in these cities, but they've certainly contributed. This is obviously an issue, as you referenced, that President Donald Trump is particularly invested in. And Springfield is the city that many people may recall. He referenced during a presidential debate and alleged that Haitian immigrants were eating the community's cats and dogs.

10:02How is this community dealing with that kind of national pressure? And how likely is it that these people will be deported? They said it was just dreadful, shining this really harsh spotlight on the community. There were marches by white supremacists, bomb threats made to schools. So people felt really kind of targeted and stigmatized. I think the situation now is a bit unclear. It's not like the expiration of TPS has led to a massive show of force by immigration and customs enforcement agents coming in and rounding people up. But Haitians say that they've been summoned to appointments at ICE and they've been fitted with ankle monitors to monitor their movements.

10:56And they fear that that is a prelude to deportation. So they're preparing for the worst. You have some excellent on-the-ground reporting, which we will put a link to in our show notes. Guy Chazan is the FT's U.S. national correspondent. Thanks so much for your time, Guy. Thank you. You can read more on all of the stories in today's podcast for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back next week for the latest business news. The FT News Briefing is produced by Safiya Ahmed, Sonia Hudson, and me, Victoria Craig. Our show is mixed by Alex Higgins and Sam Giovinco.

11:34we get help from Peter Barber, Michael Lello, David DeSilva, Gavin Coleman, and this week from Nisha Patel. Our intern is Cole Van Miltenburg, and by the way, it's Cole's last day with us, so thank you so much for everything you've done. We look forward to seeing what you do next. Our executive producer is Topher Forges, Flo Phillips is the FT's global head of audio, and our theme song is by Metaphor Music.

12:06Thank you.