The global diesel supply crunch could persist into the second half of 2027, as refinery disruptions in the Middle East and Russia, coupled with depleted inventories, continue to constrain supplies despite recovering crude oil exports.
The International Energy Agency (IEA), in its October Oil Market Report, said global gasoil and diesel markets remained under significant pressure following prolonged disruptions to refinery operations and exports from the two regions.
According to the agency, global diesel exports fell by 700,000 barrels per day (bpd) in September 2026 compared with the same period last year, as a combined 1.3 million bpd loss from Russia and the Middle East was only partly offset by increased supplies from other sources.
The agency warned that even a rapid recovery in refinery operations towards the end of the year would not be sufficient to meet demand in the fourth quarter of 2026.
Consequently, replenishing inventories beyond normal seasonal fluctuations is unlikely before the second half of 2027, it said.
The supply crunch comes as crude oil shipments from the Middle East have begun to recover, highlighting the difference between crude availability and the supply of refined petroleum products.
According to the IEA, refined-product exports from the Middle East have recovered much more slowly than crude oil flows, remaining severely constrained.
The disruption has tightened global diesel and gasoil markets ahead of the winter demand season, with inventories declining more sharply than usual.
“Falling inventories, soaring cracks, and steepening levels of backwardation have signalled the need for additional supplies,” the agency said in the report.
Diesel prices, which exceeded $200 per barrel in September in major markets, have eased from their record highs but remain nearly double their pre-crisis levels and the price of crude oil, according to the IEA.
The agency attributed the sustained pressure to reduced refinery output, constrained exports and strong diesel demand, supported in part by government measures aimed at cushioning consumers from higher fuel prices.
The IEA warned that elevated diesel prices are increasingly affecting the wider economy by raising transportation costs, pushing up the prices of goods and putting pressure on household purchasing power.
The impact is particularly significant because diesel is widely used in road freight, agriculture and industrial activities, making its price a major factor in supply-chain costs.
In the United States, higher diesel prices have contributed to rising operating costs for trucking companies, with some of the additional expenses being passed on to customers, according to Oxford Economics.
US inflation also accelerated in September 2026, with consumer prices rising 3.7 per cent year-on-year and 0.6 per cent from August.
The US Bureau of Labor Statistics reported that gasoline prices rose 9.1 per cent during the month, accounting for more than half of the monthly increase in the overall consumer price index. The energy index increased 5.2 per cent, following a 2.1 per cent rise in August.
The IEA said diesel would account for about 25 per cent of the projected 2.6 million bpd decline in global oil demand in 2026, as high fuel prices and a deteriorating economic outlook weigh on consumption.
Although global refinery output is expected to improve in 2027, the agency said the recovery would not immediately compensate for the supply shortfall accumulated this year.
The global diesel market is therefore expected to remain tight well into 2027, with a sustained recovery dependent on the restoration of refined-product supplies from the Middle East.