Key facts
- Global diesel supply is constrained by refinery issues in the Middle East and Russia.
- The diesel crunch is expected to last into mid-2027, according to the IEA.
- Record diesel prices are contributing to broader economic impacts and inflation.
- US trucking operating costs have surged due to high diesel prices.
- Global diesel exports decreased by 700,000 bpd in September year-on-year.
The global diesel market faces a prolonged crunch, with supply constraints stemming from refinery issues in the Middle East and Russia, according to the International Energy Agency (IEA). Despite increased crude oil flows from the Strait of Hormuz, refined product availability remains significantly reduced. The IEA projects that the diesel and gasoil markets will remain tight into mid-2027, with inventories depleted ahead of winter demand. This shortage, coupled with strong, price-inelastic demand, has driven diesel prices to record highs, impacting transportation costs and broader economic activity. Analysts note that additional crude oil exports alone cannot resolve the reduced refinery output, highlighting the need for normalization across the entire energy supply chain. The economic spillover is evident in rising trucking costs and contributing to inflation, as seen in the September US CPI data.