The war in Iran has pushed fuel prices to record levels, and the head of America’s second-largest oil company says the world is running out of simple ways to absorb the shock.
“These are all buffers in the system that bought us time, but they were exhausted,” Chevron CEO Mike Wirth told CNBC. Squawk Europe Box on October 7. “So we are currently at much lower inventory levels, which makes the system more vulnerable to disruption.”
Wirth said the world enters 2026 well-stocked. “We started this year with high stocks,” he said, pointing to commercial stocks held by companies and strategic reserves held by governments around the world. Since the start of the war in late February, these reserves have been gradually depleted: companies have reduced their commercial stocks, governments have released emergency stocks and sanctioned barrels have been allowed to reach buyers.
He described this situation as “a very serious situation”.
Wirth was blunt in saying that stock releases are just a stopgap measure. They are “buying time,” he said, but the underlying problem is “limited flows from some of the world’s largest producing regions.”
Diesel relief not coming anytime soon
Nowhere is the pressure greater than diesel, the fuel that powers trucks, trains and farm equipment. The U.S. average hit a record $6.53 per gallon on Sept. 22, according to AAA data cited by CBS News, up from about $3.76 before the U.S. and Israel launched war in late February. In California, the statewide average topped $8 per gallon.
Don’t expect this to change quickly. In its October oil market report, released on Wednesday, the International Energy Agency said the diesel market would remain tight until 2027 and depend on a recovery in fuel supplies from the Middle East. Benchmark diesel prices have retreated from September records above $200 a barrel but remain nearly double crude prices and their pre-crisis levels, and the IEA said depleted diesel stocks are unlikely to be replenished beyond normal seasonal fluctuations until the second half of 2027.
The agency expects global oil supply to fall by an average of 5.8 million barrels per day this year, to 100.7 million barrels per day, before rebounding in 2027, and estimates that the market will remain in deficit until the end of the year. It also projects that high prices will reduce global oil demand by 2.6 million barrels per day in 2026, with diesel accounting for about a quarter of that decline.
Trump’s supply race
With less than three weeks until the November 3 midterm elections, fuel costs have become a political burden for the White House. An AP-NORC poll released October 1 reveals that Americans disapprove of President Donald Trump’s handling of the war in Iran and blame him for rising prices. Fortune reported.
Trump tried several levers. In late September, he launched a ban on U.S. diesel exports, telling a Fox News reporter on September 27, “We’re looking at it very seriously,” while acknowledging that it could drive up gasoline prices. Refiners have warned the policy would have the opposite effect, arguing it could force factories to cut production and ultimately tighten domestic supply. Wirth called the idea “reckless,” telling CNBC that “export bans, whether in the United States or other countries, actually take supply away from the global market and risk making the situation worse.”
Trump shelved the idea on October 2, after the Group of Seven, following a pressure campaign by his administration aimed at Europe, agreed to release 100 million barrels of crude oil and diesel from emergency reserves over four months, with an early release of diesel within the first 20 days. “We are not going to impose an export ban,” Trump told reporters that day.
Three days later, he signed an executive order allowing truckers and farmers to use red-tinted diesel – normally reserved for off-road equipment and exempt from road fuel taxes – on public roads. The order defers, rather than eliminates, the 24.4-cent-per-gallon federal excise tax until Dec. 31, without interest or penalties, and directs Treasury to explore ways to rescind the bill entirely. Analysts were skeptical: The waiver “doesn’t add supply globally,” said GasBuddy’s Patrick De Haan. Fortune.
Few levers remain
Trump’s latest move came on October 9, when he announced that Russian President Vladimir Putin had agreed to supply more than 4 million tons of diesel to global markets in stages. The Treasury Department simultaneously issued a blanket license waiving sanctions on Russian diesel until April 7, 2027.
The deal sparked a bipartisan backlash in Congress and a sharp rebuke from Ukrainian President Volodymyr Zelensky, who wrote on X that “allowing Russia to sell oil products is an investment in a war that must end, not prolong.”
It may not bring much relief either. Ukrainian drone strikes on Russian refineries have wiped out the country’s fuel production: Russian exports of diesel and gas oil fell to around 144,000 barrels per day in September, the lowest level in a decade, and some analysts doubt that Moscow can deliver the volumes announced by Trump. The IEA said in its latest report that the easing of Russian export restrictions is unlikely to significantly change the global diesel balance, as the bottleneck lies in the lack of refining capacity.
This brings us back to Wirth’s warning. Stockpile releases, sanctions relief and tax breaks can buy time, but they cannot replace the oil and fuel that does not flow out of the Middle East. And with reserves already used, there is little left to cushion the next disruption.
Gn bussni
