IEA warns diesel shortages could last until 2027 as wars between Iran and Ukraine reduce fuel supplies
Diesel shortages could persist until 2027, as wars in Iran and Ukraine curb production in the Middle East and Russia, the International Energy Agency warned on Wednesday.
Diesel refining margins hit a record high of nearly $95 a barrel in September as attacks on energy infrastructure slashed production.
The IEA said combined losses from diesel exports from the Middle East and Russia totaled 1.3 million barrels per day last month.
“Record diesel prices are already having broad economic consequences by increasing the cost of goods and impacting real incomes, economic activity and inflation,” the IEA said in its monthly oil market report.
“Diesel markets remained under significant stress as prolonged supply disruptions forced counter-seasonal inventory draws ahead of refinery maintenance in the fall and peak demand in the winter,” the IEA said.
“As the system’s remaining reserves continue to erode, in the absence of a resolution to conflicts in the Middle East, oil markets could see more turmoil in the coming months before a possible surplus emerges in 2027.”
The agency said a resumption of refinery operations later this year could help replenish inventories, but would not make up for the diesel deficit already accumulated.
IEA members are coordinating the release of 100 million barrels of oil and diesel from emergency reserves to ease price pressure.
The warning comes as Middle East crude exports recover from disruptions caused by war, with shipments through the Strait of Hormuz reaching 10.9 million barrels per day in September.
But the IEA warned that “the recent escalation of attacks on regional energy infrastructure and oil tanker traffic threatens to derail further progress.”
Reuters contributed to this report.
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