Global Diesel Shortage Set to Persist Well Into 2027 as Spring Maintenance Looms

By James Calloway

Global seaborne gasoil and diesel exports averaged 4.7 million bpd over the first nine months of 2026 — down 700,000 bpd, or 10%, from the same period a year earlier — and the IEA expects the distillate market to stay tight well into 2027. That single figure frames the state of the global fuel market: crude is flowing again; diesel is not.

What do the Asian import numbers show?

Asia, the world's largest oil-importing region, imported 26.39 million bpd of crude in October, up from 24.24 million bpd in September, per Kpler data cited by Reuters columnist Clyde Russell. That is nearly on par with the 27 million bpd three-month average before the Iran war began in late February, and a 39% rebound from the April low of 19 million bpd.

Crude moving through the Strait of Hormuz to Asia tells a sharper story. Those flows jumped to 7.4 million bpd in October from just 1.6 million bpd in April — still far below the pre-war level of about 13 million bpd. Asian refiners have offset the gap by lifting imports from Saudi Arabia's Red Sea port of Yanbu, and by materially raising purchases from Russia and the Americas.

The takeaway: crude supply to Asia has largely normalized, but the recovery depends on longer, costlier routes.

Why is diesel the distressed barrel?

Light and middle distillate imports into Asia tell the opposite story. Kpler pegged them at about 6.15 million bpd in October — still 10% below pre-war levels. Imports from the Middle East alone sit 18.4% below pre-war volumes, although total fuel imports rose from September on increased supply from the Americas and Africa.

The causes stack up. Middle East refinery runs remain reduced, with some plants still out following Iranian strikes early in the war. Product transfers through the Strait of Hormuz have dropped because ship-to-ship transfers of highly flammable fuels have become far riskier. Ukrainian strikes on Russian refineries have removed Russian diesel exports from the market entirely. Together these factors sent refining margins and retail prices to record highs in the third quarter.

Refineries outside the Middle East and Russia cannot offset the lost capacity at a time when middle distillate demand is rising heading into the northern hemisphere winter.

How long will the crunch last?

Longer than crude traders might like. Investment banks and the IEA have warned the tightness could persist until mid-2027.

"Even if refinery output rose early next year, the diesel and gasoil market balance will remain tight well into 2027 and is dependent on a recovery of product supply from the Middle East," the IEA said in its October Oil Market Report. "Failing this, further demand reductions and the heavy economic costs these will entail may be needed to balance markets."

Morgan Stanley, writing last month, flagged a second constraint: unusually heavy spring maintenance in the second quarter of 2027, as refiners defer turnarounds from this year to maximize production now. The expected drop in refinery utilization in Q2 2027 would be two and a half times the usual capacity taken offline globally by spring maintenance — more than the Middle East and Russian capacity currently offline.

The takeaway: even a full recovery of damaged refining capacity would collide with a wave of deferred maintenance next spring.

What is the watch item?

China's export policy holds the near-term answer for Asia's Q4 balances. "China remains the main Asian uncertainty. October's clean-product export plan was around 500 kt below September's, while November diesel and jet export volumes remain unclear," said Abhishek Kumar, senior oil market analyst at Sparta Commodities, last week.

"Additional Chinese cargoes could loosen Asian balances, but the market needs greater clarity on approvals and actual loadings," he added.

For diesel buyers, the swing variable is Beijing's November export quotas and loadings — watch those before betting on relief in the distillate market.