The global diesel shortage caused by the war involving Iran is likely to last well into 2027, with depleted stocks unlikely to recover until the second half of next year, the International Energy Agency (IEA) said on Wednesday.
In its October Oil Market Report, the Paris-based agency said supplies of gasoil, which includes diesel and heating oil, would fall short of demand in the fourth quarter of 2026, even as refineries increase output towards the end of the year. Stocks fell at a time of year when they normally build, leaving thin buffers ahead of peak winter demand in the northern hemisphere.
Diesel exports from the Middle East and Russia fell by a combined 1.3 million barrels a day in September, and global diesel exports were 700,000 barrels a day lower than a year earlier. Diesel refining margins rose to nearly $95 a barrel (about R1,570) in September as attacks linked to the conflict reduced refining capacity.
IEA October 2026 Oil Market Report: Key Forecasts
| Measure | Forecast |
|---|---|
| 2026 oil demand change | Down 2.6 million barrels a day |
| Diesel share of demand decline | About 25% |
| 2026 oil supply change | Down 5.8 million barrels a day |
| 2027 oil supply change | Up 7.7 million barrels a day |
| 2027 demand vs 2025 | 0.6% lower |
| Diesel inventory recovery | Second half of 2027 Source: International Energy Agency, via The National, Bernama, CNBC |
The IEA expects overall oil demand to fall by an average of 2.6 million barrels a day in 2026, with diesel accounting for about a quarter of the drop. Diesel demand has held up better than other fuels because it is less sensitive to price and has been supported by government relief measures. Retail diesel prices have risen to record levels in most major economies, the agency said.
Global oil supply is projected to fall by 5.8 million barrels a day to 100.7 million barrels a day this year, before rebounding by 7.7 million barrels a day in 2027. The IEA expects higher refinery output to return the diesel market to a seasonal surplus by early next year, but not enough to rebuild stocks. It warned that renewed attacks on Gulf energy infrastructure, including in Saudi Arabia, could derail the recovery.
On 2 October, G7 leaders pledged to speed up the IEA’s coordinated release of emergency stocks, prioritising diesel. North Sea Dated crude, a physical benchmark, was trading near $134 a barrel (about R2,210) when the report was prepared.
The outlook has direct implications for South Africa, which imports most of its diesel after the closure of several domestic refineries. Diesel powers freight trucking, mining, agriculture and backup generation, so sustained high prices feed into transport and food costs. Deputy President Paul Mashatile said this week that the economy contracted by 0.2% in the second quarter, and Pick n Pay has cited elevated fuel prices as a drag on consumer spending.
The agency said that without a resolution to the conflict, oil markets could face further turmoil in the coming months before a surplus emerges in 2027.