Global Conflicts Show No Signs of Abating. The IEA Now Expects Diesel Supplies to Remain Tight in 2027.

The International Energy Agency (IEA) expects for diesel supplies to remain tight in 2027 as conflicts around the world show no signs of abating.

In a new report, the agency noted that hostilities between Russia and Ukraine and across the Middle East have led to a drop of 1.3 million barrels of diesel per day, and have only been partially offset by increased production elsewhere in the world.

The result is that global diesel exports in September were 700,000 barrels per day lower than the same month last year.

"While global diesel prices have eased from the all-time highs of more than $200/bbl reached in September, benchmarks remain nearly double the price of crude oil and their pre-crisis levels," the IEA said.

It went on to note that the prices are already having "broad economic consequences by raising the cost of goods and impacting real incomes, economic activity, and inflation."

In fact, consumer prices rose above expectations in the U.S. in September, with more than half of the increase being explained by gas prices, which rose more than 9% last month.

"The energy index increased 5.2 percent over the month following a 2.1-percent increase in August. The shelter index rose 0.4 percent in September after rising 0.3 percent in August. The index for food was unchanged in September, as the index for food away from home increased 0.2 percent and the index for food at home fell 0.1 percent," the Bureau of Labor Statistics detailed on Wednesday.

Odds of a rate hike by the Federal Reserve climbed after the report. They stand at 56.3% for the October meeting, compared to 77.9% on Tuesday, according to the CME Group's FedWatch tool.

The IEA also said last week it will speed up the release of oil stocks and prioritize diesel. The agency said in a statement that so far "approximately 325 million barrels of oil have been released under the March 2026 Collective Action, with some countries having released greater volumes than they initially pledged."

It added that 100 million more barrels are set to be released. And noted that IEA Member governments "still have significant levels of publicly held emergency oil stocks – equivalent to around 1.1 billion barrels, including over 200 million barrels of diesel."

"The IEA stands ready to release more of these stocks to the market if and when required," the document noted.