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The week in brief · Week 42 · 12–18 October
Two more ships went down near the Strait of Hormuz this week, but the most telling numbers came from the fuel markets. The International Energy Agency (IEA) said the world is short of diesel rather than crude, and that the gap will last into 2027. European gas climbed to its highest price in almost four years, Berlin drafted plans to rethink gas storage, and EU leaders asked the Commission for more short-term relief. Power prices told a quieter story: in Europe's sunniest markets, the crisis has barely touched the middle of the day.
The IEA's October Oil Market Report, published on Wednesday, reframed the supply shock. Global oil supply is expected to fall by 5.8 million barrels a day this year and demand by 2.6 million barrels a day, with diesel accounting for about a quarter of the drop. Supply could then rebound by up to 7.7 million barrels a day in 2027 and push the crude market back into surplus. Diesel is a different matter. After September's attacks on refineries in Russia and the Middle East, exports of the fuel from those two regions fell by 1.3 million barrels a day, and diesel's premium over crude widened to a record $95 a barrel. The agency expects the shortage to persist well into next year.
Emergency stocks are running down slowly. Of the 400 million barrels pledged in March, about 331 million have been released, and the pace has dropped from 2.2 million barrels a day in the spring to 270,000 in September. IEA members agreed this week to release more than 20 million barrels of diesel as soon as possible, alongside what remains of the March pledge. Washington is also weighing whether to ease sanctions on some shadow-fleet tankers to bring freight rates down, after temporarily lifting sanctions on Russian diesel.
