Diesel supplies could remain tight well into next year as disruptions in the Middle East and Russia continue to affect global fuel markets, potentially adding to costs for farmers and other diesel-dependent industries.
The International Energy Agency reports combined diesel export losses from the Middle East and Russia reached about 1.3 million barrels per day in September. Attacks on energy infrastructure and reduced refinery production have contributed to tightening supplies.
Those disruptions have also pushed diesel refining margins to record levels, approaching $95 per barrel.
The IEA warns that higher diesel prices are contributing to inflation by raising transportation and production costs and could put additional pressure on economic activity.
The situation is particularly important for agricultural producers. Farmers rely heavily on diesel to operate tractors, combines and other equipment, while fuel is also a major expense for transporting grain, livestock and agricultural inputs.
Higher diesel prices can increase production costs at a time when many producers are already dealing with tight margins, weak commodity prices and elevated input expenses.
Some relief could come as global refinery activity increases toward the end of the year. However, the IEA says the expected recovery in refinery output is unlikely to fully replace supplies lost because of disruptions in Russia and the Middle East.
Additional pressure could develop during the coming months as seasonal refinery maintenance temporarily reduces production and winter demand for heating and transportation fuels increases.