Crude and Diesel Prices Climb Amid Gulf Disruption
The IEA's September 2026 Oil Market Report shows crude prices at their highest since May, as the US-Iran standoff drags on with no resolution in sight. Brent futures have climbed above $105 a barrel, up more than $20 since the start of August and 45% above pre-war levels.
The bigger strain is downstream. US diesel prices have pushed past $200 a barrel, nearly double pre-war levels, with Europe and Asia not far behind. Gulf exports of diesel and other refined products remain roughly 60% below February levels, as Strait of Hormuz disruption persists and attacks on Russia's refining system cut its exports further. Refiners elsewhere are running flat out to capture the resulting record Atlantic Basin margins.
Even so, the IEA expects global oil supply to average 100.7 mb/d this year, down 5.7 mb/d on 2025, with a Middle East recovery pushed back to 2027. Demand is falling too, forecast down 2.5 mb/d in 2026 on high fuel prices and a petrochemical feedstock squeeze, before recovering by 2.6 mb/d in 2027.
For now, inventories are holding the market together, down 507 million barrels since the war began. Those buffers are shrinking, and with refining capacity already stretched thin, the market has little room left to absorb any further disruption.