Diesel supply crunch likely to extend into 2027
Analysts say reduced refinery runs, deferred maintenance and uncertain Chinese exports will keep global diesel shortages tight through mid-2027.
Global diesel supplies have tightened sharply since the Iran-related conflict began, and analysts warn the shortage could last until at least mid-2027. While crude oil imports to Asia have rebounded to near pre-war levels, refined product flows, especially diesel, remain well below those benchmarks.
Reduced refinery runs in the Middle East, lingering damage from early war strikes and hazardous ship-to-ship transfers through the Strait of Hormuz have cut product exports. Russia’s own fuel crunch, caused by Ukrainian attacks on its refineries and a halt to diesel shipments, has added to the strain, pushing refining margins and retail prices to record highs in the third quarter.
Asia’s crude imports rose to about 26.4 million barrels per day in October, close to the three-month pre-war average, but diesel imports lagged, estimated at roughly 6.15 million barrels per day – about 10 % below pre-war volumes. Imports from the Middle East are down 18.4 % from those levels, even as supply from the Americas and Africa has risen.
"China remains the main Asian uncertainty. October’s clean-product export plan was around 500 kt below September’s, while November diesel and jet export volumes remain unclear," said Abhishek Kumar, senior oil market analyst at Sparta Commodities. "Additional Chinese cargoes could loosen Asian balances, but the market needs greater clarity on approvals and actual loadings."
The International Energy Agency’s October Oil Market Report noted that global seaborne diesel exports fell to an average 4.7 million barrels per day in the first nine months of 2026, 10 % lower than the same period a year earlier. The agency warned that even if refinery output improves early next year, the diesel market will stay tight through 2027 unless Middle Eastern product supplies recover.
Morgan Stanley forecasts that planned maintenance deferred from this year will cause a second-quarter 2027 drop in refinery utilization two and a half times larger than the usual spring maintenance pace, exceeding the current offline capacity in the Middle East and Russia.