IEA cuts oil supply and demand forecasts as diesel shortage deepens amid Gulf and Russia export disruptions
Global diesel and gasoil markets are tightening fast — fast enough to strain the entire oil system. In August, net exports from the Gulf and Russia combined ran 1.6 million barrels per day below pre-conflict levels. That gap is big enough that the International Energy Agency revised its global oil supply and demand forecasts downward. And according to the IEA, the squeeze is getting worse, not better.
IEA lowers global oil forecasts as diesel markets tighten
When the IEA revises both its supply and demand forecasts at once, that’s not a routine tweak. It means the disruption is broad enough to shift the entire supply-demand balance — not just nudge diesel prices in one region.
The number behind that revision is the 1.6 million barrels per day shortfall in net diesel and gasoil exports from the Gulf and Russia in August, compared to pre-conflict levels. That’s a massive chunk of global supply missing all at once. The gap has been widening, not closing.
The impact on diesel and gasoil has been especially sharp, given the Gulf’s role as a critical supplier to markets across Asia, Europe, and beyond.
Two overlapping causes are at work here. Gulf product exports have been severely constrained since the Middle East conflict began, while Russia’s refining system has taken mounting hits that slashed its ability to ship diesel to international buyers. When two of the world’s biggest diesel export regions are impaired at the same time, the pressure on global markets compounds fast.
Ukrainian attacks on Russian refineries compound Gulf supply constraints
Before the war in Ukraine, Russia ranked among the largest diesel exporters on the planet. European buyers especially leaned hard on Russian supply. Sanctions and trade rerouting already cut those flows significantly — but things have gotten considerably worse since.
Intensified Ukrainian strikes on Russian refining infrastructure have brought the country’s refined product exports to a near-halt. These attacks targeted processing capacity directly, which means Russia isn’t just choosing not to export. In many cases, it simply doesn’t have the operational refining capacity to produce enough product.
That distinction matters a lot. Sanctions-driven restrictions can theoretically be eased or worked around. Physical damage to refineries takes longer to fix and creates a more durable supply gap — the IEA’s framing around Russia reflects exactly that. This isn’t a temporary trade disruption; it’s a structural reduction in refining output.
Gulf constraints aren’t waiting their turn, either. Both disruptions are happening simultaneously, and that simultaneity is what makes this squeeze so hard for global markets to absorb.
Shrinking global oil inventories leave markets exposed to further shocks
So far, global oil inventories have done most of the heavy lifting to keep markets from seizing up. When export volumes fall short, buyers draw on stored supplies to bridge the gap. That’s worked — but it comes at a cost.
Global observed oil stocks have fallen by more than 500 million barrels since the war started. Inventories that once provided a comfortable cushion against supply disruptions are now considerably thinner, and they keep shrinking.
The IEA’s concern is straightforward: markets have been managing this disruption by running down reserves, and that strategy has limits. As buffer stocks decline, the system grows less resilient to new shocks — a further escalation in the Middle East, more strikes on Russian refining capacity, an unexpected demand surge, or some combination of all three. With the global refining system already stretched, there’s far less slack to absorb new problems.
Background: How the Middle East conflict reshaped global oil product flows
The Middle East conflict has disrupted oil flows continuously since it began, hitting both crude markets and refined product trade. The impact on diesel and gasoil has been especially sharp, given the Gulf’s role as a critical supplier to markets across Asia, Europe, and beyond.
Gulf producers export large volumes of diesel and gasoil that importing nations depend on for transportation, agriculture, and industry. When those flows get constrained — by conflict, infrastructure damage, or trade route disruption — effects ripple outward fast. No simple substitute supplier is waiting to step in.
Russia’s diminished role makes that worse. Before the war, Russia supplied a significant share of Europe’s diesel, flows that have been progressively cut off through sanctions and, more recently, physical damage to refining capacity. Europe has adapted partly by sourcing from the Middle East and elsewhere, but that rerouting has tightened Gulf supplies further, creating a feedback loop that keeps amplifying the original problem.
The result is a global refining system under a kind of dual pressure not seen in recent history. Two major diesel export regions impaired at the same time. Inventories declining. No obvious near-term resolution to either conflict.
A drop of 1.6 million barrels per day
The IEA has cut its global oil supply and demand forecasts in response to a worsening diesel and gasoil squeeze. Net exports from the Gulf and Russia were 1.6 million barrels per day below pre-conflict levels in August. Ukrainian strikes have brought Russian refined product exports to a near-halt, while Gulf constraints continue unabated. Global oil inventories have fallen by more than 500 million barrels since the war began, leaving markets with a thinner buffer and greater vulnerability to further disruption.
Kelly is an experienced writer with 15 years of experience exploring the big stories that shape our world, from tech breakthroughs and space exploration to climate, energy, and the fascinating quirks of science. She has a talent for turning complex ideas into sharp, memorable insights that stay with readers long after they’ve finished reading.
