The global diesel market is expected to remain under pressure until at least mid-2027, as damaged refineries in the Middle East and Russia’s reduced export capacity continue to constrain supplies, while rising winter demand threatens to push prices higher.
Analysts say the disruption cannot be resolved quickly because refineries outside the affected regions are already operating at high capacity to compensate for lost production. Many have postponed scheduled maintenance to sustain output, leaving them with limited room to increase supply further without risking equipment failures and unplanned shutdowns.
The International Energy Agency warned in its October Oil Market Report that tight conditions in the diesel and gasoil markets could persist into the middle of next year. Morgan Stanley has similarly projected that global fuel markets will remain constrained until at least mid-2027, citing refinery maintenance scheduled for the second quarter of next year.
The outlook suggests that restoring crude oil shipments alone will not be enough to resolve the shortage. Refining capacity, product transportation and the recovery of exports from major supplying regions remain critical to replenishing the global diesel market.
Crude oil flows through the Strait of Hormuz have reportedly recovered to near pre-war levels, according to several vessel-tracking services. However, refined petroleum products remain more difficult to transport from the Persian Gulf because of security risks and the use of smaller tankers, which can limit the volume carried per shipment.
Refined fuels are also more vulnerable to fire if vessels are struck during attacks, adding to the risks faced by shipowners and operators moving cargoes through the region.
The supply disruption has been compounded by damage to refineries following Iranian strikes during the conflict. Bahrain’s Bapco refinery has reportedly restored operations to about 75 per cent of its full capacity, but Saudi Aramco’s 400,000-barrel-per-day Jizan refinery remains shut after multiple attacks.
Located on the Red Sea, Jizan is a significant refining facility whose continued shutdown restricts the region’s ability to supply petroleum products to international markets.
Russia’s declining diesel exports have added another layer of pressure. Ukrainian drone attacks have left about half of the country’s refineries offline for extended periods, contributing to domestic fuel shortages and prompting Moscow to restrict diesel exports.
A partial relaxation of the export restrictions followed an agreement announced by U.S. President Donald Trump involving Russian President Vladimir Putin to supply diesel to the United States.
The first shipment under the arrangement, comprising approximately 40,000 metric tonnes, or 300,000 barrels, of ultra-low-sulphur diesel, departed Russia’s Baltic Sea port of Primorsk last week, according to the report.
However, the cargo is unlikely to make a meaningful difference to the U.S. market. Robin Mills, chief executive of energy consultancy Qamar Energy, said the shipment was expected to reach New York on November 7 and represented less than one-tenth of U.S. daily diesel consumption.
The limited volume highlights the gap between individual supply arrangements and the scale of the global shortage. Analysts expect the Russian shipment to have little effect on overall availability or prices, particularly in the short term.
With few immediate options for increasing production, the market faces additional pressure as winter approaches. Demand for heating oil is expected to rise across the Northern Hemisphere, particularly in the United States, where diesel prices have remained elevated despite government efforts to reduce fuel costs.
Patrick De Haan, head of petroleum analysis at GasBuddy, said the national U.S. diesel average had edged higher in the week before his latest assessment, while gasoline prices were also expected to remain above $4 per gallon.
He said diesel prices were above $6 per gallon heading into the November 3 U.S. midterm elections, leaving motorists and policymakers without the relief they had anticipated despite fuel-tax reductions in some states and measures taken by the Trump administration.
De Haan also compared current pump prices with those recorded during the 2022 midterm elections. U.S. gasoline prices were 42.3 cents per gallon above the 2022 election-day average, while diesel was nearly $1 per gallon higher than the previous record of $5.33.
Both fuels were on course for their highest election-day prices on record, although not necessarily their highest prices ever, he said.
Beyond the immediate supply constraints, deferred refinery maintenance threatens to tighten the market further in 2027.
According to Morgan Stanley, planned refinery downtime in the second quarter of next year is expected to be about two-and-a-half times the usual volume of capacity taken offline for spring maintenance. The projected reduction in operating capacity would exceed the amount of refining capacity currently unavailable in the Middle East and Russia.
Refineries outside the affected regions have delayed maintenance to maximise output during the current shortage. However, those repairs cannot be postponed indefinitely without increasing the risk of equipment failures and unexpected shutdowns that could further reduce fuel production.
The expected maintenance cycle could therefore coincide with a period when the market is still recovering from existing disruptions, limiting the prospect of a rapid return to normal supply conditions.
With the global market facing these constraints, analysts have also pointed to reducing diesel consumption as one way to limit exposure to high prices.
Mills said fuel savings would need to become a strategic priority, including greater use of natural gas-powered heavy-duty vehicles, gas or battery-electric public transport and electric passenger cars.
Europe’s transition towards electric vehicles has also gained momentum amid record fuel prices, adding to efforts by governments to reduce dependence on conventional petrol and diesel vehicles.
However, demand-side changes are unlikely to provide an immediate solution because replacing diesel-powered vehicles and transport systems takes time. In the near term, the balance of risks remains tilted towards higher prices if supply from the Middle East and Russia fails to recover sufficiently.
The outlook presents a challenge for transport operators, manufacturers, farmers and other businesses that depend on diesel for vehicles, machinery and power generation. Persistently high fuel costs could increase operating expenses and feed into the prices of goods and services.
For the global market, a sustained recovery will depend on the restoration of damaged refining facilities, the resumption of more reliable petroleum-product exports from Russia and the Middle East, and the safe movement of fuel cargoes through key shipping routes.
Until those conditions improve, analysts expect diesel availability to remain tight and prices to face continued upward pressure well into 2027.