The key facts

  • IEA: oil supply in September rose to 102.3 million bpd but remains below demand of about 103.5 million bpd.
  • Diesel has retreated from records above $200 per barrel but is still nearly twice as expensive as pre-crisis levels; stocks may not recover until the second half of 2027.
  • Demand forecasts diverge: the IEA lowered its estimates, OPEC raised its 2027 forecast to 2.55 million bpd.

Shortage persists despite rising production

The International Energy Agency (IEA) warned on Wednesday that the diesel fuel market will remain tight at least until 2027, and wholesale diesel prices in Europe may rise again in the coming weeks. According to the agency's assessment, the recovery of oil supplies from Persian Gulf countries has not removed the shortage: global production still lags behind consumption. In September, supply rose by 2.5 million barrels per day — to 102.3 million barrels per day — thanks to increased exports from the Gulf, led by Saudi Arabia, to more than three-quarters of pre-war levels, but this is still slightly below global demand, which the IEA estimates at about 103.5 million barrels per day.

The conflict in the region continues

The war, which began on February 28 with US and Israeli strikes on Iran, is far from over, according to the IEA. Iran has blocked the Strait of Hormuz, through which about a fifth of the world's oil passes, and has intensified attacks on ships, while Tehran-backed Yemeni Houthis are striking Saudi oil facilities. 'The renewed attacks in the Persian Gulf make the recovery extremely fragile,' the agency said. On Tuesday, the British agency UKMTO reported that projectiles of unknown origin hit a tanker and a container ship in the strait. Early on Wednesday, Iran's Islamic Revolutionary Guard Corps said a container ship with more than 2,500 containers sank south of the strait after hitting a sea mine and catching fire; according to the corps, the vessel was travelling along an unauthorized route.

Oil and diesel prices

Brent rose about 1% on Wednesday morning, briefly exceeding $107 per barrel, then part of the gain was lost and prices held around $106. West Texas Intermediate traded virtually unchanged at about $94.75 per barrel. Diesel prices have retreated from September records above $200 per barrel, but, according to the IEA, benchmark prices 'still stand at almost twice the price of crude oil and their pre-crisis levels.' Diesel supplies remain under pressure: exports of petroleum products from the Middle East are less than half of pre-war volumes, and Russian refineries are being attacked by Ukrainian drones. The IEA warned that as tensions spread from the crude oil tanker market to other types of vessels, diesel in key importing regions — Europe, Africa and Latin America — may become more expensive again. Lost diesel stocks, according to the agency, are unlikely to recover beyond normal seasonal fluctuations before the second half of 2027.

G7 reserves

The G7 on October 2 pledged to release up to 100 million barrels from reserves through the IEA, primarily diesel fuel. However, according to an internal document seen by Euronews, this refers to barrels still remaining under the March pledge to release 400 million barrels (of which 326 million have already been used), not an additional volume.

Diverging demand forecasts

The IEA expects high prices and slowing economic growth to reduce global oil demand this year by 2.6 million barrels per day — to 102.4 million barrels per day, slightly more than the 2.5 million barrel reduction forecast a month ago. The recovery forecast for next year has been lowered from 2.6 to 2 million barrels per day, meaning demand in 2027 will remain 0.6% below the 2025 level. OPEC, by contrast, is more optimistic: on Tuesday, for the sixth consecutive time, it lowered its 2026 demand growth forecast — to 180,000 barrels per day from 380,000 — but raised its 2027 estimate to 2.55 million barrels per day from 2.36 million, counting on the recovery of war-depleted stocks. According to OPEC, OPEC+ countries' production in September rose by about 900,000 barrels per day — to 39.07 million barrels per day. Seven key members of the alliance on October 4 left production targets for November unchanged, with most producing below quotas due to the war; the next meeting is scheduled for November 1. The UAE left both formats in May. If the conflicts in the region are not resolved, 'oil markets may face a new wave of shocks in the coming months before a possible surplus emerges in 2027,' the IEA warned ahead of its executive board meeting on Thursday.