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Diesel supply disruptions in the Gulf caused by the US war against Iran will keep global markets tight well into 2027, as rebuilding depleted inventories will take time, the International Energy Agency (IEA) said on Wednesday.
“The gasoil market balance will remain tight well into 2027 and is dependent on a recovery of product supply from the Middle East,” the Paris-based agency said in its monthly energy market report.
Diesel prices have reached record highs across Europe and the United States in recent weeks amid reduced oil exports from the Gulf and damage to regional refineries from Iranian retaliatory attacks.
Governments have responded by cutting fuel taxes, providing subsidies and releasing strategic reserves to ease supply pressures. Those reserves, however, will eventually need to be replenished.
The IEA expects refining capacity to recover, potentially creating a diesel surplus in the first quarter of next year and helping inventories rise broadly in line with normal seasonal patterns.
However, the anticipated surplus will not fully offset the supply shortfall accumulated since the United States and Israel launched strikes against Iran in late February, triggering a sharp rise in global energy prices.
The agency warned that if Gulf supplies fail to return to normal levels soon, further reductions in demand may be necessary to balance the market, potentially imposing significant economic costs.
