In its October 2026 Oil Market Report, the agency says diesel prices have eased from record highs reached in September but remain close to double their pre-crisis levels and are trading at nearly twice the price of crude oil.
The report warns that supply shortages could persist well into 2027, even as crude oil exports from the Middle East recover, because shipments of refined petroleum products have been slower to resume.
The IEA says crude oil exports from Gulf producers rose by 4.4 million barrels per day to 13.9 million barrels per day in September, recovering to more than 75 per cent of pre-war levels. However, shipments of refined petroleum products from the Middle East remain below half of their pre-war levels, leaving diesel markets under pressure.
The disruptions, compounded by reduced supplies from Russia and some Asian countries, cut global diesel and gasoil availability by 1.5 million barrels per day in the second quarter of 2026 and 1.7 million barrels per day in the third quarter compared with the corresponding periods a year earlier.
The agency attributes the continuing uncertainty to the conflict in the Middle East, including increased attacks on ships passing through the Strait of Hormuz and attacks on energy infrastructure in the region. Shipping costs have also risen sharply.
By mid-October, the cost of transporting crude oil from the Gulf to Asia on a large tanker had climbed to more than five times its pre-war level.
The IEA says the higher cost of fuel is already affecting household purchasing power, economic activity and inflation as businesses face increased costs of moving goods.
The agency forecasts that demand will fall by 2.6 million barrels per day in 2026 to 102.4 million barrels per day, as high prices and a deteriorating economic outlook in some countries weigh on consumption.
Despite the decline in demand, the oil market is expected to remain in deficit through the end of the year.
Global observed oil inventories were 509 million barrels below pre-war levels at the end of September, with on-land stocks at their lowest levels since at least 2016, according to the report.
The IEA expects diesel and gasoil supplies to remain constrained into 2027, with replenishment of depleted inventories unlikely before the second half of next year. It warns that oil markets could experience further turmoil in the coming months if the Middle East conflicts remain unresolved.
For fuel-importing economies, sustained pressure on diesel and shipping costs could feed into transport and production expenses, although the extent and timing of any impact on domestic fuel prices will depend on local supply arrangements, taxes, exchange rates and pricing policies-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
