Global Diesel Shortage Driven by Iran and Ukraine Conflicts to Last Until 2027

Diesel prices in the United States have climbed above $6 per gallon, reaching a level not seen before. This steep rise is tied to a global shortage of diesel fuel that analysts say is unlikely to improve until 2027, according to a recent Reuters report.

Data from the Energy Information Administration (EIA) reveals that U.S. diesel stocks were at 107.9 million barrels as of September 11, marking the lowest level recorded for this time of year since records started in 1982. The EIA forecasts that distillate fuel oil inventories, which include diesel, will fall below 100 million barrels in September and stay under the five-year average throughout 2026 and much of 2027.

Looking ahead, retail diesel prices in the U.S. are projected to average $5.55 per gallon in the last quarter of 2026 and $4.40 per gallon in 2027. These figures underscore the prolonged nature of the supply issues facing the market.

Additional evidence from the storage sector supports these forecasts. Diesel storage leases across North America and the Caribbean have surged to a four-year peak, with 13 million barrels reserved for October. This contrasts with just 11 million barrels available back in June. Steven Barsamian, chief operating officer of The Tank Tiger, noted that numerous storage contracts remain unsigned because of the limited amount of diesel actually available to store. This unusual situation—a drop in inventories combined with growing storage capacity—signals that market participants expect shortages to persist well into the next year.

The root of the diesel scarcity lies primarily in disruptions caused by ongoing conflicts in two key regions. In the Middle East, hostilities have curtailed tanker movements through the strategically important Strait of Hormuz. This has resulted in reduced crude oil supplies reaching refineries, which directly affects diesel production. Simultaneously, Ukraine’s attacks on Russian refining infrastructure have further curtailed output. The EIA estimates that these refinery outages in Russia will continue to impact the global distillate market through the first half of 2027.

Beyond the U.S., diesel inventories in Europe and Asia are showing signs of strain as well. Data from Insights Global highlights that stocks at the Amsterdam-Rotterdam-Antwerp hub were approximately 16 percent below the five-year average in July. Similarly, Singapore’s distillate reserves have averaged 8.2 million barrels recently, falling short of the 9.6 million barrels typical for 2025.

The spike in diesel prices is influencing several sectors. Carmit Glik, CEO of Ship4wd, explained that rising diesel costs directly affect freight expenses, farm equipment operation, food distribution, and any service relying on truck transportation. Mark Wolfe, executive director of the National Energy Assistance Directors Association, cautioned that households dependent on heating oil, particularly in the northeastern U.S., could face winter heating bills that are up to 31 percent higher if diesel prices remain elevated.

The current diesel shortage is a complex issue with significant implications for both consumers and industries around the world. It stems from geopolitical tensions and supply chain constraints that have limited refinery capacity and disrupted fuel flows. As diesel remains vital for transportation, agriculture, and heating, the prolonged supply challenges highlight vulnerabilities in global energy markets. Stakeholders will need to monitor developments closely and consider strategies to mitigate the impact of sustained high prices on the economy and daily life.