Diesel Heads Toward Price Hikes and Shortages: When Will the Fuel Crisis End?

The International Energy Agency warned that diesel shortages in the global market will persist through 2027.

In its monthly oil market report, the International Energy Agency (IEA) warned that diesel supply constraints may continue until 2027, as sharp declines in inventories, contrary to the usual seasonal trend, have coincided with production restrictions ahead of peak winter demand.

The profit margin of diesel refining, the difference in the price of this fuel compared to the price of basic crude oil in September reached an unprecedented record of about 95 dollars per barrel; Because the reduction of the refining capacity caused by the US military aggression against Iran severely reduced the production.

"Diesel markets remain under severe pressure as prolonged supply disruptions, ahead of the start of fall refinery maintenance and peak winter demand, have led to the withdrawal of stocks against the usual seasonal pattern," the agency said.

The International Energy Agency expects the activity of the world's refineries to improve later this year and the process of restoring reserves will begin, but this amount will not be enough to cover the accumulated deficit this year.

Members of the agency are coordinating the release of 100 million barrels of oil and diesel from strategic reserves to calm prices. The move comes amid growing political and economic pressure, as this key fuel is widely used in industry, agriculture and transportation.

The agency announced that the total decline in diesel exports from the Middle East and Russia in September reached 1.3 million barrels per day.

The International Energy Agency predicts that global oil demand will decrease by 2.6 million barrels per day in 2026, of which 25% will be related to diesel.

According to a Reuters report, the body, which advises industrialized countries, said: "Unprecedented diesel prices have already had wide-ranging economic consequences by increasing the cost of goods and affecting real incomes, economic activity and inflation."

Meanwhile, the agency predicts that global oil supply will fall by 5.8 million barrels per day this year, but then reverse and increase by 7.7 million barrels per day in 2027, which will bring the global oil market back into oversupply.