Fuel costs, including diesel, have reached new highs as armed conflicts in the Middle East and Ukraine have curtailed crude oil output and put refining infrastructure out of action, tightening available processing capacity across global markets. According to a recent assessment by French authorities, worldwide crude oil supplies are running approximately 10 million barrels per day below demand. That figure carries weight when set against pre-conflict global oil consumption, which ran at roughly 105 million barrels daily.
The closure of the Strait of Hormuz by Iran initially cut off approximately 20 million barrels of oil per day, though Saudi Arabia has since redirected a portion of its exports through the Red Sea while certain tankers have also returned to the waterway. Houthi forces, which have links to Iran, have established control over the Bab al-Mandeb Strait, leading to a reduction in Saudi exports passing through the Red Sea.
The impact on international markets remained limited, as countries held adequate commercial and strategic stockpiles following a period in which output had exceeded demand throughout 2025. At the same time, the International Energy Agency (IEA) reported a decline in consumption exceeding one million barrels daily, driven notably by China's reduced crude oil purchases and its transition toward alternative energy sources.
According to IEA figures, tracked worldwide petroleum inventories have fallen by approximately 507 million barrels relative to pre-war levels. Nations such as China, which withhold reserve data from international reporting, are excluded from that total.
Fuel costs for diesel have reached elevated levels across both North America and Europe. On Monday, AAA reported that fuel prices across the country had climbed to an all-time high of $6.52 per gallon. Petrol prices in France reached an average of 2.41 euros per litre (approximately $10.40 a gallon) on Sunday, according to an AFP analysis.
Economist Paul Krugman, a Nobel laureate, noted in a recent post that the prevailing global energy situation stems primarily from a shortage of petroleum refining capacity rather than a shortfall in crude oil supply itself. Restrictions on Russian oil imports imposed by Western countries have coincided with Moscow's own export limitations, following drone strikes on its refining infrastructure by Ukrainian forces. Prices have risen as the remaining purchasers of Russian supplies compete to secure available stock.
Petroleum refining facilities across the region have also drawn attacks attributed to Iranian actors, with Gulf states standing among the world's leading exporters of processed oil products. Even if shipping through the Strait of Hormuz were to restart, the diesel supply would stay constrained for a period, with Janiv Shah, vice president at Rystad Energy, noting that the disruption's global reach had pushed diesel prices up across all regions, while Europe faced particular vulnerability as a net importer of the fuel.
Shah noted that while some nominal spare capacity exists on paper, very little of it can be brought online rapidly or matched to the appropriate crude oil grades. Restoring the flow of petroleum through the Strait of Hormuz would most likely offer the fastest route to reducing prices, he noted, given that it would enable Asian refineries to receive adequate supplies.
Toril Bosoni, who leads the oil industry and markets division at the International Energy Agency, noted recently that a continuation of restricted Gulf output alongside rapidly depleting commercial stockpiles could necessitate both price increases and reduced consumption to bring supply and demand back into balance. Rystad analyst Shah noted that higher prices would curb diesel use to some degree, though the effect would remain constrained, as trucking, agriculture, construction, and industrial sectors have few near-term substitutes available to them.
