The global diesel shortage is expected to persist well into 2027, driven by reduced refining capacity in the Middle East and Russia. Crude oil imports in Asia have rebounded to pre-war levels, reaching 26.39 million barrels per day in October, but refined product imports remain weak. Diesel supply has been particularly constrained, with global seaborne gasoil and diesel exports dropping by 700,000 barrels per day over the first nine months of 2026.
The Iran war, which began in late February, has disrupted refining operations in the Middle East, while Ukrainian strikes on Russian refineries have further tightened supply. The Strait of Hormuz has seen reduced flows of refined products due to dangerous ship-to-ship transfers, exacerbating the crunch. Analysts warn that the situation will extend into 2027 as many refineries will undergo long-overdue maintenance in the spring.
Asia’s crude oil imports have recovered, with October levels nearing pre-war averages, but light and middle distillate imports remain 10% below pre-war volumes. China’s export policies will be crucial for regional supply in the fourth quarter, though clarity on approvals and loadings remains uncertain. The International Energy Agency (IEA) and investment banks predict that the diesel market will stay tight until at least mid-2027, depending on a recovery of product supply from the Middle East.
Morgan Stanley notes that planned maintenance in the second quarter of 2027 will further reduce refinery utilization, potentially causing economic costs if demand reductions are needed to balance markets. The global fuel market remains under significant strain, with refining margins and retail prices hitting record highs in the third quarter.