EIA raises fourth-quarter price forecasts as global supply disruptions tighten refined-fuel markets
U.S. diesel inventories are expected to fall below 100 million barrels for the first time since 2003, as disruptions to Russian and Middle Eastern supply tighten global fuel markets and pull more American barrels overseas.
The U.S. Energy Information Administration said in its September outlook that distillate stocks, including diesel and heating oil, are set to breach the 100 million-barrel threshold this autumn. Inventories stood at about 104.2 million barrels at the end of August, leaving the market exposed ahead of refinery maintenance, the harvest season and winter heating demand.
The agency raised its fourth-quarter retail diesel forecast by about 14% from August to $5.55 a gallon, while its wholesale forecast jumped roughly 33% to $4.29.
National pump prices had already climbed to almost $6 a gallon by early September, above the previous 2022 peak.
The squeeze reflects a broader shortage of middle distillates. Ukrainian attacks have disrupted Russian refining, while conflict involving Iran has constrained Gulf exports and shipping through the Strait of Hormuz. Strong overseas demand has consequently kept U.S. distillate exports near five-year highs.
The risk is increasingly a refined-products problem rather than simply an oil-price shock. With diesel embedded in freight, agriculture, construction and industry, persistent shortages could keep transport and production costs elevated even if crude prices retreat, adding another source of pressure to the U.S. inflation outlook.
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