IEA Releases Over 20 Million Barrels of Diesel as Middle East Conflict and Russian Export Ban Drive Prices to Records
The International Energy Agency agreed to release more than 20 million barrels of diesel to ease global shortages caused by the expanding war in the Middle East, disruptions in the Strait of Hormuz, and Russia's export ban. Canadian retail diesel prices have hit a record $2.67 per litre, while Brent crude stands at US$105.81.
The International Energy Agency (IEA) has agreed to release more than 20 million barrels of diesel to support a global market struggling with severe shortages and surging prices. The intervention comes as geopolitical tensions across the Middle East and Eastern Europe continue to strain energy supplies.
In Canada, the average retail price for diesel reached a record high of $2.67 a litre this week. On Thursday, the global oil benchmark Brent crude was priced at US$105.81. Surging diesel prices are driving up inflation globally, placing significant strain on consumers and markets alike.
The current crisis in the Middle East began on Feb. 28 when the U.S. and Israel launched co-ordinated military strikes on Iran. In response, Iran largely closed the Strait of Hormuz, a crucial shipping lane that carries roughly a fifth of the world’s oil and gas supplies. Shipping risks through the strait have increased costs due to the need for ship-to-ship transfers.
Saudi Arabia’s exports have also been impacted by Iran-backed Houthi rebels, who seized islands along Red Sea shipping routes, blew up an oil pipeline, and attacked Aramco headquarters. Despite these disruptions, crude oil exports from Gulf producers, led by Saudi Arabia, surged by 4.4 million barrels last month to reach 13.9 million barrels a day.
Global supply disruptions have placed additional pressure on diesel markets following Russia's decision to ban diesel exports in July. The ban came after escalating attacks on Russian refineries by Ukraine using drones. U.S. President Donald Trump claimed that Russia and Ukraine had agreed to a truce regarding energy attacks, but the deal failed as both sides continued striking energy infrastructure.
While high prices generate significant revenue for Canadian oil sands producers, confidence in normalizing oil prices is waning among analysts. Analysts from Rystad Energy and TD Cowen forecast that the average price of the North American benchmark West Texas Intermediate will sit around US$85 per barrel for 2026.