IEA says the gasoil squeeze runs into 2027 and depends on Middle East refineries restarting

The International Energy Agency’s October Oil Market Report, published in Paris on Wednesday, forecasts world oil demand falling 2.5 million barrels per day year-on-year in the fourth quarter and 2.6 mb/d on average across 2026, with diesel accounting for 25 per cent of the drop. A partial recovery of 2 mb/d still leaves 2027 global oil use 620 kb/d, or 0.6 per cent, below 2025 levels. Global diesel exports in September ran 700 kb/d below a year earlier, with a 1.3 mb/d loss from Russia and the Middle East only partly offset elsewhere; The National renders the Middle East and Russian net gasoil export fall at more than 60 per cent. Diesel and gasoil availability was cut by 1.5 mb/d in the second quarter and 1.7 mb/d in the third. The agency judged the balance “will remain tight well into 2027 and is dependent on a recovery of product supply from the Middle East.”

The price record behind that language is extreme: wholesale diesel passed $200 a barrel in Singapore in mid-September and reached all-time highs near $220 in Europe and the United States, while US diesel stocks closed September at a 14-year seasonal low and European commercial gasoil inventories hit a 25-year low in July. European refiners' diesel cracks have since fallen from about $100 a barrel to near $60 as freight and delivered crude costs rose. The IEA warned that renewed Gulf attacks could derail the supply recovery and that further consumption cuts, with “the heavy economic costs these will entail,” may be needed to balance the market. Crude closed Wednesday at $106.02 for Brent and $95.75 for WTI, both up roughly $5 to $6 on the week, after Iranian officials told Reuters anonymously that their forces plan to intensify tanker strikes using new tactics — a stated intent, not an event.

Assessment: The agency has quietly made its own forecast hostage to the shooting. A balance that depends on Middle East product supply returning is a balance that can be revised by a single refinery fire or a week of successful strikes on loading terminals, and the IEA has written that dependency into the text rather than burying it. Note what the demand collapse really is: not conservation but rationing by price, 2.6 mb/d of consumption that did not happen because distillate cost $220. The crack spread retreating from $100 to $60 is the one encouraging line, and it reflects freight and crude costs rising rather than products loosening. Treat the Reuters-sourced Iranian threat as talking the market, because it works.