IEA warns global gasoil market tightness to extend into 2027

PARIS, Oct. 14 (Xinhua) -- Tightness in the global gasoil market is expected to extend into 2027 amid prolonged supply disruptions and escalating attacks on energy infrastructure in the Middle East, the International Energy Agency (IEA) said Wednesday.

In its October Oil Market Report, the IEA said global diesel exports fell by 700,000 barrels per day (700 kb/d) year on year in September, as prolonged supply disruptions led to counter-seasonal stock draws ahead of autumn refinery maintenance and peak winter demand.

Although global gasoil prices have eased from record highs of more than 200 U.S. dollars per barrel in September, benchmark prices remain nearly twice the level of crude oil prices and almost double their own pre-crisis levels.

The IEA warned that record gasoil prices were already having widespread economic consequences, raising the cost of goods and affecting real incomes, economic activity and inflation.

The IEA said the gasoil market balance is expected to remain tight well into 2027, depending on a recovery in product supplies from the Middle East. It added that without such a recovery, further demand reductions may be needed to balance the market, potentially at a high economic cost.

Global oil demand is forecast to fall by 2.5 million barrels per day (mb/d) year on year in the fourth quarter of 2026 and by an average of 2.6 mb/d over the full year. A partial recovery of 2 mb/d in 2027 is expected to leave global oil consumption 620 kb/d, or 0.6 percent below 2025 levels, it said.

Global oil supply is projected to decline by an average of 5.8 mb/d to 100.7 mb/d in 2026, before rebounding by 7.7 mb/d in 2027. However, renewed attacks in the Gulf are threatening to undermine the recovery, the IEA said.

A recovery in Middle Eastern oil supply was well underway in September, with Gulf crude oil exports approaching pre-war levels. However, escalating attacks on regional energy infrastructure and tanker traffic are threatening further gains, the IEA said, adding that Brent crude futures have risen by 13 percent since the beginning of September to around 107 dollars per barrel.

In the absence of a resolution to conflicts in the Middle East, oil markets may experience more turmoil in the months ahead before any eventual surplus emerges in 2027, the IEA said.  ■