IEA Sees Tight Diesel Market Well Into 2027 as Mexico Expands Subsidy

The International Energy Agency (IEA) warned on October 14, 2026 that the global gasoil (diesel) market will remain tight well into 2027 and that lost inventories will not be rebuilt before the second half of that year. In its October 2026 Oil Market Report, the Paris-based body stated that "the gasoil market balance will remain tight well into 2027 and depends on a recovery in product supply from the Middle East."

The report's figures capture the scale of the rupture. Global gasoil production fell to 26.4 million barrels per day (mb/d) in the second quarter of 2026, 1.5 mb/d below a year earlier, and to 27.2 mb/d in the third, a year-on-year decline of 1.7 mb/d. Combined net exports from the Middle East and Russia plunged 1.3 mb/d in September, to 820 thousand barrels per day, more than 60% below a year earlier. OECD gasoil inventories fell to 565 million barrels in July, 5% below pre-conflict levels and their lowest since November 2023.

The channel to Mexico is direct. The country imports close to 40% of its domestic consumption from the United States, according to Bloomberg Línea, leaving it exposed to international tightness. The government maintains a voluntary cap with retailers to keep diesel below 27 pesos per liter, an arrangement facing resistance: more than 170 stations suspended fuel sales.

The Ministry of Finance and Public Credit raised the complementary diesel stimulus to 1.09 pesos per liter for the October 10 to 16 period, 49 cents more than the previous week, and kept the full IEPS exemption, equivalent to 7.36 pesos per liter, according to Global Energy. The average diesel price stood at 27.01 pesos per liter, according to PETROIntelligence, practically at the ceiling of the agreement.

The report anticipates that refineries will return a surplus to the gasoil market in the first quarter of 2027, insufficient to offset the deficit accumulated in 2026. The IEA conditions that scenario on a recovery in product supply from the Middle East and warns that, failing that, the adjustment would fall on further demand reductions, with high economic costs.

This article was written with the assistance of artificial intelligence based on verified sources and reviewed by a human editor before publication.