IEA Warns Diesel Squeeze Will Last Into Late 2027 as Exports Drop 700,000 Bpd
Updated
Updated · CNBC · Oct 14
IEA Warns Diesel Squeeze Will Last Into Late 2027 as Exports Drop 700,000 Bpd
3 articles · Updated · CNBC · Oct 14
Summary
The IEA said diesel supply will stay tight into the second half of 2027, with fourth-quarter 2026 supply still falling short of demand and lost inventories unlikely to be rebuilt before then.
A 1.3 million-barrel-per-day loss from Russia and the Middle East, only partly offset elsewhere, drove a counter-seasonal gasoil tightening after heavy stock draws; global diesel exports fell 700,000 bpd year on year last month.
Wholesale diesel topped $200 a barrel in Singapore and hit record highs near $220 in Europe and the United States, while U.S. pump prices reached $6 a gallon; the IEA said freight tensions could push delivered prices higher again.
Trump's deal with Putin to add 300,000 metric tons of Russian diesel drew U.S. and European criticism, and EU official Valdis Dombrovskis said the volumes would have no macroeconomic significance.
The agency expects overall oil demand to fall 2.6 million bpd in 2026 and supply to rebound 7.7 million bpd in 2027, but warned attacks in the Gulf, including strikes on Saudi Arabia, leave any recovery fragile.
Why does diesel still face shortages into 2027 even as global oil demand is expected to fall?
Could Gulf shipping risks and lost Russian exports keep diesel prices near record highs despite new supply promises?
Global Diesel Crisis 2026: Record Prices, Supply Collapse, and the Geopolitical Roots of a Worldwide Energy Shock
Overview
In late February 2026, military conflict erupted in the Middle East after U.S. and Israeli strikes on Iran, disrupting oil flows through the Strait of Hormuz and damaging key energy infrastructure. This led to major refinery shutdowns and a sharp drop in diesel exports from the Middle East. At the same time, Ukrainian drone attacks on Russian refineries caused Russia to lose much of its refining capacity and halt diesel exports. Together, these shocks caused global diesel trade to fall, inventories to be drained, and prices to reach record highs. The resulting supply chain disruptions and soaring costs forced governments and companies to shift toward renewables and alternative fuels.