Key facts
- Global diesel supplies are expected to remain tight into at least the first quarter of next year.
- US diesel inventories declined to 107.9 million barrels by September 11, the lowest for this time of year since 1982.
- European diesel inventories are also low, with stocks in the Amsterdam-Rotterdam-Antwerp hub 16% below the five-year average in July.
- Russia will extend diesel export restrictions until the end of October.
- US diesel prices may rise further as US East Coast buyers purchase barrels ahead of the heating season.
- Analysts expect record diesel refining margins to encourage more production, limiting price increases.
A global diesel shortage, driven by conflicts in Ukraine and Iran, is poised to last into 2027, according to industry participants and storage market indicators. The disruptions have stranded millions of barrels of diesel daily in the Middle East and Russia, depleting inventories to historic lows and sending prices to record highs.
In the United States, retail diesel prices surpassed $6 a gallon this month, impacting farmers and truckers. Data from storage broker The Tank Tiger shows that diesel storage capacity available for lease in North America and the Caribbean has climbed to a four-year high of 13 million barrels for October. US diesel inventories fell to 107.9 million barrels by September 11, the lowest for this time of year since records began in 1982, according to the US Energy Information Administration (EIA).
The EIA forecasts that US distillate fuel oil inventories will fall below 100 million barrels in September and remain below the five-year low through the end of 2026 and most of 2027. European diesel inventories are also low, with stocks in the Amsterdam-Rotterdam-Antwerp hub 16% below the five-year average in July. Russian diesel export restrictions are expected to remain in place through October.
Despite the tight supply, analysts anticipate that record diesel refining margins will encourage increased production, potentially limiting further price hikes. China has also been steadily boosting diesel exports in recent months, which could offer some relief. However, any escalation in the Iran or Russia-Ukraine wars, or a major refinery outage, could trigger fresh price spikes.