Global diesel supplies are expected to remain tight well into next year as Middle East fuel exports struggle to recover despite a recent rebound in crude shipments, the International Energy Agency said. Supply fell by 1.7 million barrels a day in the third quarter, as the Iran war curtailed flows through the Strait of Hormuz while Russia had to cut output due to Ukrainian attacks on its refineries. Diesel is a key part of the global economy, fueling trucks, heavy equipment and ships.
The IEA said global gasoil exports averaged 4.7 million barrels a day in the first nine months of 2026, down 10% from a year earlier. In September, combined net exports from the Middle East and Russia fell more than 60%. Refiners initially benefited from exceptional margins as diesel prices surged, but soaring tanker rates and rising crude delivery costs have since eaten into profitability.
European diesel refining margins fell from around $100 a barrel to close to $60 by early October. Prices have eased from September's record highs of more than $200 a barrel, yet remain nearly double the price of crude and prewar levels. High prices are curbing consumption, but not enough to make up for lost supply.
Global diesel consumption fell by 1.1 million barrels a day in the second quarter and a further 750,000 barrels a day in the third, to 28.7 million barrels a day. Inventories offer little cushion. The global gasoil market shifted to an estimated deficit of about 100,000 barrels a day in the third quarter, compared with a surplus of 880,000 barrels a day a year earlier.
The IEA expects stock draws to accelerate in October as winter demand rises and refineries undergo seasonal maintenance. A recovery in refinery output is expected to return the market to a surplus in the first quarter of 2027.
Source: Wall Street Journal US Business · Summarized by HeadlinesBriefing