Tight diesel supplies could persist well into next year as conflicts curb output from the Middle East and Russia, while record high prices spur stock drawdowns ahead of peak winter demand, the International Energy Agency said on Wednesday.
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 caused by attacks on energy infrastructure linked to the Iran and Ukraine wars hit production.
“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 in its monthly oil market report.
The IEA expects a recovery in global refinery operations towards the ?end of this year, which would start to replenish stocks. Still, this will be insufficient to offset the deficit accumulated in middle distillates markets this year, the IEA said. Diesel, gasoil, and jet fuel all fall under the middle distillates category.
IEA members are coordinating the release of 100 million barrels of oil and diesel from emergency reserves in an attempt to calm prices, amid growing political and economic pressure as the key fuel is used widely in industry, agriculture, and motoring.
Combined losses of diesel exports from the Middle East and Russia totalled 1.3 million barrels per day in September, the agency said.
“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.
Overall global oil demand is forecast to fall by 2.6 million bpd in 2026, 25% of which will come from diesel, the IEA 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.
Oil prices were little changed on Wednesday, with Brent futures trading at around $105.80 per barrel at 0932 GMT, up 0.1% from the previous close. Diesel refining margins were up 2% on the day at around $85.42 per barrel.
Crude oil exports from ?Middle East Gulf producers rose by 4.4 million bpd in September to around 75% of pre-war levels, the IEA said.
This was driven by a 3.7 million bpd rise in shipments through the Strait of Hormuz to 10.9 million bpd, due to robust ship-to-ship transfer activity in the Gulf of Oman.
“However, the recent escalation in attacks on regional energy infrastructure and tanker traffic is threatening to derail further gains.”