The diesel shortage isn't going anywhere. Despite a frenzy of activity to boost supplies, some experts expect it to last into 2027, lifting global inflation for months.
"Diesel is gonna continue to be a huge problem for some time," said Dan Yergin, the Vice Chairman of S&P Global and a Pulitzer Prize-winning energy historian, in an interview on Friday. "Certainly for the next two months, you're not gonna see much impact because the system is disrupted. There will be marginal increases, but not on the scale that will alleviate what is a global problem."
The International Energy Agency predicted this week that supplies will be constrained "well into 2027." Even if refineries are able to pump out more fuel, countries will be in a rush to restore their depleted stockpiles, keeping prices elevated.
President Donald Trump is trying all sorts of methods to bring down the price of the fuel, which is particularly important for trucking and farming, and heating oil in the winter. Diesel prices have hit records around the world in the past few weeks, because of a shortage sparked by the wars in Russia and Iran, and exacerbated by a decline in diesel exports from China.
In the U.S., diesel cost an average of $6.33 a gallon at the pump on Friday, down only marginally from the record high of $6.53 it hit last month, according to AAA. Last year, a gallon cost $3.65.
The global diesel deficit in September was at 1 million barrels per day, according to JP Morgan, as the diesel trade fell to 6.1 million barrels from 7.1 million a year earlier.
Trump has turned to extraordinary measures, including making a deal with Russia and removing federal taxes on diesel used in trucking. But energy experts don't expect those efforts to result in much more diesel making it to buyers. Russia has officially imposed a diesel export ban, but has still been exporting about 140,000 barrels per day, down from over 700,000 in normal times.
Natasha Kaneva, the chief global commodities strategist at JP Morgan, thinks Trump's deal with Russia may simply formalize Russia's existing exports without adding supply. In fact, by her count the agreed-upon volumes that Russia can export are below what it's been sending out.
"Under the agreement, Russian diesel exports are set at 75,000 barrels per day in October and 125,000 in November," she writes.
A decision by European countries to tap into their strategic stockpiles could be more effective, as would any move by China to start exporting more, Kaneva notes.
"France announced the release of 10 million barrels from its strategic reserves, while Germany committed to an additional 15 million," Kaneva added. "Released over October and November, this combined volume would equate to 500,000 barrels per day and would cover roughly 50% of the current diesel deficit."
But whether those countries will quickly empty their reserves remains unknown. They have in the past been reluctant to do so, even after announcing decisions, Kaneva writes.
Diesel prices have broad impacts on the economy, because trucks and farm equipment run on diesel. When prices rise, the increases flow through to the price of food and other goods.
Middle Eastern countries have also been unable or unwilling to export diesel even as they've increased exports of crude from the Strait of Hormuz.
One problem is that Iranian attacks have hit their refineries. It also can be trickier to export fuel than crude, given that crude has more access to pipelines that bypass danger zones.
Yergin was in Saudi Arabia for a petroleum conference this week and said that state oil companies are having trouble exporting their fuel.
"The other major countries from the Gulf region were there, and people can't get product out," he said.
Until they can, the diesel premium could be here to stay.
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