Global diesel shortage pushes US prices above US$6 a gallon in September

A global diesel shortage is pushing fuel costs higher for agriculture, manufacturing and heavy transport, with US retail prices exceeding US$6 a gallon for the first time in September 2026. Storage-market indicators suggest the supply squeeze could persist into 2027.

European diesel futures closed at a record high in the week ending September 18, having more than doubled since the start of 2026. Diesel prices in Asia also remained close to record levels as disruptions to exports left markets with limited options to replace lost supplies.

Middle Eastern exports halve as Russia restricts supply

Wars in Iran and Ukraine have disrupted diesel exports from major producers, including Russia, Saudi Arabia and the United Arab Emirates. Middle Eastern shipments averaged 800,000 barrels a day between March and August 2026, half the volume recorded a year earlier, according to Kpler data.

Europe is particularly exposed to the reduction in Middle Eastern supplies, which accounted for nearly 41% of its diesel imports in 2025, Kpler data showed. Disruptions have also spread to the Red Sea, an important route for Saudi Arabian diesel exports.

“Any further disruption to Red Sea flows risks tightening an already stretched global diesel market,” said George Shaw, an analyst at Kpler. Shaw said refining capacity remained a key constraint, leaving the market vulnerable to further disruption.

Russia, the world’s second-largest diesel exporter after the United States, banned diesel exports in July 2026 after Ukrainian drone attacks affected several refineries. Importers including Turkey and Brazil have consequently had to find alternative suppliers.

Refineries elsewhere have little spare capacity to replace the lost diesel production. The International Energy Agency (IEA) said many plants were already operating close to full capacity, limiting the industry’s ability to prevent supplies from tightening further.

US stock forecasts point to prolonged diesel shortages

The US Energy Information Administration (EIA) expects US distillate fuel inventories, which primarily serve the diesel market, to fall below 100 million barrels in September 2026. The agency forecasts stocks will remain below the five-year low through the end of 2026 and for most of 2027.

US diesel inventories have already fallen to their lowest level for this time of year since records began in 1982. European stocks are also low at the Amsterdam-Rotterdam-Antwerp storage and trading hub.

Diesel storage capacity available for lease in North America and the Caribbean has reached a four-year high as traders and refiners decline to renew contracts because little fuel is available to store. Falling inventories alongside increasing availability of empty tanks suggest market participants expect supplies to remain tight until at least the first quarter of 2027.

Higher Chinese diesel exports offer some relief

China increased diesel exports to around 320,000 barrels a day in August 2026, the highest level in nearly two and a half years, offering some relief to the strained global market.

Record diesel refining margins could also encourage refineries to increase production, although limited spare capacity remains a constraint on their ability to replace disrupted supplies.

Diesel prices remain vulnerable to another sharp rise if the war in Iran or the Russia-Ukraine conflict escalates, or if a major refinery suffers an outage. Alex Hodes, director of energy market strategy at StoneX, said underlying market conditions continued to support elevated diesel prices for some time.