Diesel supplies to remain 'tight' into 2027: IEA
<p>Paris, France: Demand for diesel fuel will remain unusually high into 2027 because of reduced supply from Gulf producers stemming from the US war against Iran, the International Energy Agency said Wednesday.</p> <p>"The gasoil market balance will remain tight well into 2027 and is dependent on a recovery of product supply from the Middle East," the Paris-based agency said in its monthly energy…
Diesel supplies are expected to remain scarce in the Gulf until 2027 due to disruptions caused by the US war against Iran, according to the International Energy Agency (IEA). The agency's monthly energy markets report, released on October 14, stated that it will take time for depleted stocks to be replenished. The tight gasoil market balance is contingent on the recovery of product supply from the Middle East.
Diesel prices have skyrocketed across Europe and the US in recent weeks, driven by reduced oil exports from the Gulf and damage to refineries in the region from Iran's retaliatory attacks. Governments have responded by cutting fuel taxes or providing subsidies, as well as releasing strategic reserves that will need rebuilding. The IEA anticipates that refining capacity will recover and result in a surplus on the diesel market in the first quarter of 2027, aligning stocks with normal seasonal patterns.
However, this will not fully make up for the deficit caused by the US and Israel's strikes against Iran since late February, which have caused energy prices to soar worldwide. If Gulf supplies fail to return to normal levels soon, further demand reductions and the substantial economic costs they bring may be necessary to balance the markets, the IEA cautioned.
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