IEA sees diesel supply squeeze lasting into 2027

PARIS

A garbage truck drives past gas prices above $6 a gallon and diesel prices above $8 a gallon as they are displayed outside of a Shell gas station in Carson, California on September 22, 2026. (AFP / Getty Images)

Global diesel supplies are likely to remain tight into 2027 despite falling oil demand, the International Energy Agency (IEA) said on Oct. 14, citing conflicts in the Middle East and Russia.

Diesel markets were “under extreme pressure,” the Paris-based agency said in its monthly report. It expects the global oil market to remain in deficit through the end of this year.

High prices and supply restrictions are weighing on consumption.

World oil demand is forecast to fall by 2.6 million barrels a day in 2026 to an average of 102.4 million barrels a day, the largest annual decline since the 2020 pandemic.

Demand is expected to recover by about 2 million barrels a day next year but remain slightly below 2025 levels.

Crude exports from Gulf producers recovered to more than 75 percent of prewar levels in September. However, refined fuel shipments from the Middle East remained below half their prewar levels, and security risks left supply forecasts for the rest of the year largely unchanged.

Oil stocks tracked by the agency ended September 509 million barrels below prewar levels, with stocks held on land near their lowest levels in at least a decade.

The IEA said easing the diesel shortage depended on a recovery in Middle Eastern fuel supplies. Without that, further cuts in consumption, with high economic costs, could be needed to balance the market.

It warned of further turbulence before a possible oil surplus emerges in 2027.