Global Diesel Shortage Expected to Persist Until Early 2027
U.S. retail diesel prices have exceeded $6 per gallon, with global supply disruptions from conflicts in Iran and Ukraine expected to persist into early 2027 according to the EIA. U.S. diesel stockpiles are at a historically low level for this time of year, projected to remain below five-year averages through most of next year. Storage data shows increased demand for tank space as traders anticipate continued tight supplies. The shortage is driven by reduced crude flows due to Middle East conflicts and Ukrainian strikes on Russian refining infrastructure. European and Asian inventories are also under pressure, with ARA hub levels 16% below average and Singapore’s distillate holdings trailing recent years. The price surge impacts freight, agriculture, food delivery, and home heating costs. The EIA expects Middle East production to recover by mid-2027, potentially easing the shortage. However, any escalation in conflicts or unexpected refinery disruptions could further drive up prices.
Topics: conflict impact diesel shortage energy prices global supply chain