Global diesel squeeze deepens as refinery disruptions slash supply ahead of winter

The world's refined oil product markets are heading into winter under mounting strain, as refinery disruptions from the wars in Iran and Ukraine collide with seasonal demand and dwindling inventories. The International Energy Agency warned in its September report that global refinery throughput in August was 4.2 million barrels per day lower than a year earlier, and forecast runs would average just 81.5 million bpd in 2026 — down 2.6 million bpd from 2025.aa+2

The squeeze is already rippling through consumer markets. In France, 11% of gas stations were out of stock of either gasoline or diesel as of September 18, up from 9% days earlier, prompting President Emmanuel Macron to hold an emergency meeting. In Maine, heating oil prices have surged 74% year-on-year to $5.77 per gallon, approaching the state's all-time high. And major U.S. airlines — including United ↗ 0.99%, American ↗ 0.15% and Southwest ↗ 1.59% — told investors this week they plan to cut cheaper, less profitable flights in the final months of the year as jet fuel costs climb.connexionfrance+4

A Diesel Crisis Deepens

Diesel and jet fuel are bearing the brunt. Janiv Shah, vice president of oil markets analysis at Rystad Energy, said European diesel margins had reached four to five times historical averages and recently hit record levels, driven by "a global shortage of readily available refined products". Net diesel and gasoil exports from Gulf countries and Russia fell by 1.6 million bpd between February and August, according to IEA data cited by Anadolu Agency.aa

Russian refinery activity is expected to drop roughly 1.2 million bpd year-on-year in the third quarter due to Ukrainian strikes on energy infrastructure, while Middle Eastern output is forecast to decline about 1.7 million bpd from regional conflict. Reuters Thomson Reuters Corporation ↘ 5.12% reported the IEA now sees world oil supply declining 5.7 million bpd this year, with a full recovery in Gulf flows deferred to 2027.reuters+1

Consumers and Industries Feel the Strain

The pain extends well beyond fuel pumps. The National Energy Assistance Directors Association estimates northeastern U.S. households will spend nearly $2,300 on heating oil this winter, up 31% from last year. The four largest U.S. airlines together paid nearly 80% more for fuel from April to June than a year earlier, according to CNN.cnn+2

Andres Cala, a geopolitical energy analyst at Montel, warned that diesel is "likely to remain the more vulnerable market through the winter because of seasonal demand, low inventories and limited spare refining capacity". If disruptions persist, he said, the combination of high energy costs and geopolitical turmoil "could increase instability and competition for available refined product supply globally".aa