IEA: Diesel Supply Disruptions from 'Gulf' Will Pressure Market Until 2027
International Energy Agency predicts continued tight diesel supplies until 2027 due to the war on Iran and impact on the Gulf
Translated by Qiyas from الجريدة — Original source
The International Energy Agency (IEA) said on Wednesday that disruptions to diesel supplies in the Gulf region caused by the US war on Iran will keep the market under pressure until 2027, noting that rebuilding depleted reserves will take time.
In its monthly energy market report, the Paris-based agency stated, “The diesel market will continue to face supply tightness until 2027, and its improvement will depend on the recovery of oil product supplies from the Middle East.”
Diesel prices have surged to record levels across Europe and the United States in recent weeks, due to declining Gulf oil exports on one hand, and damage to regional refineries from retaliatory Iranian attacks on the other.
Governments have responded by cutting fuel taxes or providing subsidies, as well as drawing from strategic reserves, which will need to be replenished.
The agency forecast that refining capacity would recover, leading to a diesel market surplus in the first quarter of next year, “which would raise inventories to levels generally consistent with typical seasonal patterns.”
However, the agency warned that this would not be enough to offset the accumulated deficit since the US and Israel launched strikes on Iran in late February, developments that triggered rising energy prices worldwide.
The IEA cautioned that if Gulf supplies do not quickly return to normal levels, market balancing may require further demand reductions and the acceptance of significant economic costs.
