IEA Sees Diesel Markets Tight Into 2027

The International Energy Agency said diesel markets could remain tight well into 2027, as recovery in Middle East fuel supplies will determine whether refining gains can rebuild depleted stocks. The agency’s October 14 outlook warned that an expected increase in refinery operations may create a temporary surplus, but would not erase the shortfall accumulated this year. The IEA said the gasoil market, which includes diesel, would depend on a recovery in product supply from the Middle East. It expects refining capacity to improve enough to produce a diesel-market surplus in the first quarter of 2027, lifting stocks broadly in line with normal seasonal patterns. However, the agency said that improvement would not fully compensate for the accumulated deficit in middle distillates, a category that includes diesel, gasoil and jet fuel. The agency attributed combined diesel-export losses of 1.3 million barrels per day in September to disruption involving the Middle East and Russia. Supply constraints have contributed to high diesel prices, which the IEA said are already raising the cost of goods and affecting real incomes, economic activity and inflation.