International Energy Agency issues diesel and supply constraint warning
It was stated that the diesel market is under extreme pressure due to supply disruptions, and the tight supply situation could persist until 2027.
The International Energy Agency announced that tight middle distillate supply is likely to continue until 2027 despite weak demand, and diesel supply remains under pressure due to disruptions.
Supply Shortage and 2027 Projection
In the monthly report published by the International Energy Agency, it was reported that tight middle distillate supply is likely to persist until 2027 despite low demand. Market balances are projected to continue running deficits through the end of the year.
Persian Gulf and Security Situation
Oil supplies from the Persian Gulf reached more than 75 percent of pre-war levels last month thanks to shuttle tanker operations. However, the insecure and dangerous security environment prevented the agency from raising its supply forecasts.
Global Demand and Diesel Contraction
High prices and supply restrictions are exerting pressure on global demand. While demand is projected to drop by 2.5 million barrels per day this quarter, diesel accounts for 25 percent of this decline. A major loss is also being experienced in world oil consumption on an annual basis.
Market Balances and Economic Costs
It was stated that the diesel market balance will remain dependent on the recovery of product supplies from the Middle East. If this does not materialize, further demand destruction and heavy economic costs may be required to balance the markets.