The International Energy Agency has warned that diesel supply shortages could extend until 2027 amid a sharp decline in inventories and production constraints before winter demand reaches its peak, while attacks linked to the US war on Iran threaten the recovery of oil exports from the Middle East.
Diesel refining margins reach record levels
In its monthly oil market report, the agency said diesel refining margins reached record levels of about $95 a barrel during September. It attributed this to a sharp drop in production after refining capacity fell because of attacks linked to the war.
In its report issued during October, it added that diesel markets continue to face significant pressure, as prolonged supply disruption has led to withdrawals from inventories, contrary to the usual pattern in the season ahead of refinery maintenance in autumn and the peak in winter demand.
Agency revises 2026 demand and supply forecasts
In its oil market forecasts, the agency projected a decline in global demand of 2.6 million barrels per day during 2026, compared with a previous estimate indicating a fall of 2.5 million barrels per day. It linked the revision to supply disruptions caused by the war on Iran and higher prices.
It also raised its estimate for the decline in global oil supply during 2026 to 5.8 million barrels per day, from its previous forecast of a 5.7 million-barrel-per-day decline. According to the report, total global oil supply is expected to fall about 1.73 million barrels per day below demand in 2026, compared with an expected deficit of 1.74 million barrels per day in the agency’s previous report.
For 2027, the International Energy Agency expects global supply to exceed demand by 3.94 million barrels per day, up from its previous estimate of an expected surplus of 3.73 million barrels per day. These forecasts point to continued disruption in the oil market during 2026 before it shifts to a surplus the following year.
The agency links the recovery path to developments in the Middle East conflict and the return of oil flows to normal levels.
The agency’s September report had forecast a decline in global oil demand of 2.5 million barrels per day in 2026, alongside a fall in supply of about 5.7 million barrels per day, with the full recovery of Middle Eastern supplies postponed until 2027.
