Photo caption: IEA logo
*IEA expects year-end refinery recovery to replenish stocks but not offset this year’s diesel deficit
*Middle East and Russia lose combined 1.3 million barrels per day of diesel exports in September, IEA says
*Agency says elevated diesel costs risk stoking inflation and hurting growth
Constrained diesel supplies could persist well into next year as large counter-seasonal stock drawdowns have combined with restricted production ahead of peak winter demand, the International Energy Agency said in its monthly oil market report.
Diesel refining margins, the fuel’s premium to underlying crude oil , soared to record highs of almost $95 per barrel in September, as reduced refining capacity due to attacks linked to the Iran war slashed production, Reuters reported.
“Diesel markets remained under significant strain as prolonged supply disruptions forced counter-seasonal stock draws ahead of autumn refinery maintenance and peak winter demand,” the IEA said.
The IEA expects a recovery in global refinery operations towards the end of this year, which would start to replenish stocks, but this will be insufficient to offset the deficit accumulated this year, the IEA said.
IEA members are coordinating the release of 100 million barrels of oil and diesel from strategic reserves in a bid to calm prices, amid growing political and economic pressure as the key fuel is used widely in industry and agriculture, as well as motoring.
Losses of diesel exports from the Middle East and Russia were a combined 1.3 million barrels per day in September, the agency said.
Overall global oil demand is forecast to contract by 2.6 million bpd in 2026, 25% of which will come from diesel, the IEA said.
“Record diesel prices are already having broad economic consequences by raising the cost of goods and impacting real incomes, economic activity, and inflation,” the agency, which advises industrialised countries, said.
Meanwhile, the IEA predicts global oil supply will fall by 5.8 million bpd this year, before reversing course to rise by 7.7 million bpd in 2027 to tip the global oil market back into surplus.
