Diesel squeeze set to last well into 2027 as Iran war disrupts supply, IEA says
The agency said 1.3 million barrels a day of export losses and record refining margins are keeping diesel prices elevated.
- On Wednesday, the International Energy Agency warned that global diesel markets will remain tight into the latter half of 2027, citing persistent supply disruptions and counter-seasonal stock drawdowns ahead of peak winter demand.
- A 1.3 million barrel-per-day shortfall from Russia and the Middle East, driven by refinery damage linked to the Iran war, was only partially offset by higher supply from other sources, the IEA said.
- Wholesale diesel prices reached record highs above $200 a barrel in Singapore and around $220 in Europe and the United States, raising goods costs and weighing on real incomes and inflation.
- IEA members are coordinating the release of 100 million barrels of oil and diesel from strategic reserves to stabilize volatile prices amid widespread economic and political pressure on energy markets.
- The agency warned that renewed attacks in the Gulf leave the recovery fragile, with replenishment of lost inventories unlikely before the second half of 2027 unless regional conflicts resolve.
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Even in a favourable scenario, diesel shortages will not end before the second half of next year, as stated by the IEA.
The International Energy Agency is alarming: the diesel market is under enormous pressure in the face of massive supply failures from Russia and the Middle East. Wholesale prices have more than doubled since February. At the same time, European stocks are unusually low.
Oil prices in Europe could rise again in the coming weeks, and the supply crisis could continue until the second half of 2027, warns the International Energy Agency. Although oil exports in the Persian Gulf have partially recovered, global production remains below demand level, while attacks on ships, blockade of the Ormuz Straits and blows on Russian refineries affect fuel supplies. AIE estimates that high prices and economic slowdown will redu…
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