IEA: global diesel supply to stay tight into 2027 after Gulf and Russia losses

Mixed · 2The International Energy Agency said in its October 2026 Oil Market Report, released on 14 October, that diesel markets will stay tight into 2027. 1 2 Centre · 1The agency attributes the squeeze to the Iran war, which curtailed flows through the Strait of Hormuz, and to Russian output cuts caused by Ukrainian attacks on its refineries. 2 Mixed · 2Combined Middle East and Russian diesel export losses reached 1.3 million barrels a day in September, according to IJR's account of the report. The Wall Street Journal copy carried by Hindustan Times says combined net exports from the two regions fell more than 60% that month, and that global gasoil exports averaged 4.7 million barrels a day in the first nine months of 2026, down 10% from a year earlier. 1 2

Centre · 1Hindustan Times, carrying the WSJ report, says supply fell by 1.7 million barrels a day in the third quarter. Global diesel consumption fell by 1.1 million barrels a day in the second quarter and by a further 750,000 barrels a day in the third, to 28.7 million barrels a day, which the IEA said was not enough to offset the lost supply. 2 Mixed · 2Stocks offer little cushion. The global gasoil market moved to an estimated deficit of about 100,000 barrels a day in the third quarter, against a surplus of 880,000 a year earlier, and the IEA expects stock draws to accelerate in October. A return to surplus is expected in the first quarter of 2027 as refinery output recovers, but IJR reports that inventory recovery is unlikely before the second half of that year. 2 1 Mixed · 2On prices, IJR reports refining margins of nearly $95 a barrel and wholesale diesel of about $220 a barrel in Europe and the US, and quotes the IEA saying delivered prices in Europe, Africa and Latin America "could rise again in the coming weeks". Hindustan Times says European diesel margins fell from around $100 a barrel to close to $60 by early October, and that prices have eased from September's record highs above $200 but remain nearly double crude and prewar levels. 1 2

Mixed · 2The IEA cut its oil demand outlook again, now expecting consumption to fall by 2.6 million barrels a day in 2026 to 102.4 million barrels a day and to return to growth only in March 2027. It expects supply to fall by 5.8 million barrels a day in 2026 and rebound by 7.7 million in 2027, with demand growth of 2 million barrels a day next year. IJR says diesel accounts for roughly 25% of the 2026 demand drop. 2 1 Mixed · 2Middle East crude exports rebounded in September to more than 75% of prewar levels, helped by more flow through Hormuz and restored Saudi East-West pipeline exports. The IEA called the recovery increasingly fragile because of renewed attacks on energy infrastructure and tankers, and IJR cites UKMTO reports of projectile strikes on vessels in the strait. 2 1 Mixed · 2On policy, the G7 pledged on 2 October to accelerate emergency stock releases, with diesel first. IJR says up to 100 million barrels were pledged, and that the IEA counts 331 million barrels of the March 400-million-barrel release as delivered by end-September, where Euronews cites 326 million. President Trump said he struck a diesel deal with Russia, but the WSJ copy says easing Russian export restrictions is unlikely to help much while refinery capacity is impaired. IJR adds that EU Commissioner Valdis Dombrovskis said the quantities involved were too small to move the needle. 1 2

Mixed · 2The IEA warned that without a sustained recovery in Middle Eastern product exports, further demand cuts might be needed to rebalance the market, and that "oil markets may experience more turmoil in the months ahead before any eventual surplus emerges in 2027." Brent traded above $106 a barrel and WTI around $94 in early European trading on Wednesday. 2 1