The International Energy Agency (IEA) said diesel markets will remain under pressure through 2027.
The warning was published in the IEA Oil Market Report released on Wednesday, October 14, 2026.
The agency cited disruptions linked to the Iran war, lower exports and depleted inventories as factors limiting fuel availability worldwide.
Supply Losses and Record Prices
Global diesel exports fell by 700,000 barrels a day year on year in September.
Losses from Russia and the Middle East reached 1.3 million barrels a day, and other supply sources only partly offset the decline.
Diesel prices reached record levels in major markets.
Wholesale prices exceeded $200 per barrel in Singapore in mid-September and reached around $220 per barrel in Europe and the United States.
The IEA described the inventory decline before winter demand as unusually severe.
It said the drop was driven by "much heavier-than-normal inventory declines" in recent months.
The agency said the decline in available stock reduced protection for markets ahead of colder-season consumption.
"deprived global gasoil markets of crucial stock cover ahead of the peak winter demand season," the IEA said.
Despite higher prices and broader weakness in oil consumption, diesel demand has remained relatively resilient.
"relatively price inelastic diesel demand has remained strong," the IEA said.
The agency said falling inventories and higher market pressures indicate the need for additional supplies to restore balance.
"Falling inventories, soaring cracks, and steepening levels of backwardation have signalled the need for additional supplies," the IEA said.
The IEA added that refinery output is expected to recover but may not be enough to rebuild lost inventories quickly.
"However, even with a rapid recovery expected in refinery throughputs into year-end, gasoil supply falls short of meeting demand in 4Q26, suggesting that the replenishment of lost inventories, outside of typical seasonal fluctuations, is unlikely before [the second half of 2027]," the IEA said.
U. S.
President Donald Trump said he reached a deal with Russian President Vladimir Putin for Russia to supply 300,000 metric tons of diesel to global markets.
The proposal drew criticism from lawmakers in the United States and Europe.
Speaking at the IMF meetings in Bangkok, European Commissioner for the Economy and Productivity Valdis Dombrovskis criticized easing restrictions on Russia.
"now is not a time to ease sanctions on Russia," said Valdis Dombrovskis, European Commissioner for the Economy and Productivity.
Dombrovskis said the proposed diesel volumes would have limited market impact and questioned whether Russia could deliver the supply.
"If we discuss this diesel deal specifically, it's worth noting that the volumes which are being discussed are anyway not going to have any macroeconomic significance, and the big question mark if Russia is able to deliver them anyway," said Valdis Dombrovskis, European Commissioner for the Economy and Productivity.
The IEA forecast global oil demand will decline by 2.6 million barrels a day in 2026, with diesel accounting for 25% of the reduction.
Oil supply is expected to recover in 2027 after a projected annual decline in 2026.
The agency also warned that renewed attacks targeting Gulf energy infrastructure could threaten the market recovery.
"renewed attacks in the Gulf leave the recovery fragile," the IEA said.
