IEA warns diesel prices in Europe could rise as global crunch lasts into 2027
Europe could face renewed wholesale diesel price rises in the coming weeks, the International Energy Agency warned on Wednesday, as disrupted supplies leave markets tight well into 2027 despite recovering Gulf oil output.
The International Energy Agency (IEA) has cautioned that diesel prices in Europe could surge as a global fuel shortage persists into 2027. In a recent report, the Paris-based agency noted that recovering oil supplies from the Gulf have not alleviated the diesel crunch, as global production continues to fall short of demand. September saw a 2.5 million barrel-a-day (mb/d) increase in supply to 102.3 mb/d, driven by Saudi-led Gulf crude exports nearing three-quarters of pre-war levels, but still lagging global consumption of around 103.5 mb/d.
The ongoing conflict, which began with US-Israeli strikes on Iran in February, remains unresolved. Iran has blockaded the Strait of Hormuz, the route for about a fifth of the world's oil, and increased attacks on ships in the area, while Houthi rebels in Yemen continue to target Saudi oil facilities. The IEA highlighted that renewed attacks in the Gulf could disrupt the recovery.
Meanwhile, Brent crude, the global oil benchmark, climbed near 1%, spiking above $107 per barrel, but later settled around $106. US benchmark West Texas Intermediate traded flat at approximately $94.75. Diesel prices have slipped from September's record highs above $200 per barrel but remain nearly double the price of crude oil and their pre-crisis levels.
With Middle Eastern fuel exports at just half their pre-war levels and Russian refineries damaged by Ukrainian drones, diesel supplies are under pressure. Rising shipping costs may exacerbate the issue. As tensions in the crude market have spread to other tanker categories, delivered diesel prices in Europe, Africa, and Latin America could rise again in the coming weeks.
The G7 has committed to releasing up to 100 million barrels of emergency stocks through the IEA, primarily diesel, but an internal document reveals this would only cover remaining March pledges, not add to them. The IEA now anticipates high prices and slower growth to reduce global oil demand by 2.6 mb/d in 2025, slightly more than the earlier forecast of 2.5 mb/d.
OPEC, the oil exporters' group, is more optimistic, lowering its 2026 demand growth forecast to 180,000 barrels a day from 380,000, but raising its 2027 estimate to 2.55 mb/d from 2.36 mb/d, expecting stocks depleted by the war to be replenished.
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