Diesel prices have climbed to record levels in major international markets as wars in Iran and Ukraine disrupt exports from several key fuel-producing countries, raising concerns that further supply problems could push prices even higher in the coming months.
Prices have risen sharply across Europe and the United States, with European diesel futures reaching an all-time high last week. Current prices are now more than twice their level at the beginning of 2026, highlighting the growing pressure on the global market for refined fuels.
The situation has been aggravated by disruptions to shipping through the Red Sea, an important route for energy supplies. A significant share of Saudi Arabia’s diesel exports is transported through the waterway, meaning prolonged disruption could further tighten supplies in international markets.
The conflicts in the Middle East and Ukraine have also affected refinery operations. Damage to several refineries in the two regions has reduced available refining capacity and increased pressure on facilities elsewhere to produce additional diesel and other refined petroleum products.
Data from the International Energy Agency (IEA) indicate that US refineries were operating at their highest level of utilisation in eight years towards the end of August. However, higher output from American refineries may offer only limited relief because many refineries elsewhere are already operating close to their maximum capacity.
In a newsletter published on Monday, the IEA said many refineries around the world were already running near their operational limits. If diesel supplies decline further in the coming months, there would be little spare capacity available to compensate for the shortfall and prevent further price increases.
Shipping data compiled by commodities information provider Kpler show the scale of the decline in Middle Eastern diesel exports. Between March and August this year, diesel exports from the region fell to almost half the level recorded during the same period a year earlier. Average exports stood at around 800,000 barrels a day during the six-month period.
The Middle East remains a major source of diesel for European consumers. Kpler data show that the region accounted for about 41 per cent of Europe’s total diesel imports in 2025. Any sustained reduction in supplies from the Middle East could therefore have a direct impact on European fuel markets and potentially influence prices in other regions through competition for alternative supplies.
Kpler analyst George Shaw said any further disruption to fuel shipments through the Red Sea could deepen pressure on an already strained global diesel market. He identified refinery capacity as the biggest constraint currently facing the international diesel market.
The situation has also been complicated by developments in Russia. Ukrainian drone attacks have reduced production at several Russian refineries, while Moscow halted diesel exports in July following the disruption to domestic refining capacity.
The continuing conflict between Russia and Ukraine remains a major source of uncertainty for the global fuel market. US President Donald Trump said last week that Russia and Ukraine had reached an understanding on halting attacks against energy infrastructure. However, attacks on energy facilities have reportedly continued on both sides.
Ukrainian President Volodymyr Zelenskyy said on Sunday that he would meet Trump within the next few days. Any progress in discussions over attacks on energy infrastructure could therefore become significant for the wider fuel market, particularly if it helps restore refinery operations and stabilise regional supplies.
For now, however, the global diesel market remains under considerable pressure. With exports from the Middle East sharply lower, refinery capacity already stretched and transport routes vulnerable to disruption, even a relatively modest additional supply shock could have a substantial effect on prices. The combination of reduced production, constrained refining capacity and geopolitical uncertainty is leaving fuel markets with limited room to absorb further disruptions.
