The US Energy Information Administration forecasts that domestic inventories of distillate fuel oil, the category sold at the pump as diesel, will fall below 100 million barrels in September and stay under the 2021 to 2025 low through the end of 2026 and most of 2027. The projection appears in the September 2026 Short Term Energy Outlook, released September 9.

Distillate stocks dropped below the five year range in April. The decline coincided with heavy US net exports of the fuel after large volumes of distillate supply were lost from the Middle East, Russia and China. Lower international refinery production of distillate lifted global prices through the summer, and that gap pulled more US barrels overseas. Net exports have sat at or near the five year high in every month of 2026 since February.

EIA expects the squeeze to tighten seasonally. Distillate production normally falls during the autumn refinery maintenance season, while harvest demand and winter heating demand rise. The agency estimates US diesel crack spreads will exceed $2 per gallon from August through November before easing through mid 2027, an outlook that assumes tanker traffic through the Strait of Hormuz returns to normal.

Lost refinery activity in Russia adds further upward pressure on global distillate prices, and EIA estimates those outages will affect the market into the first half of 2027. For US carriers, thin distillate inventories leave a fuel market with little cushion against another supply interruption.

Source: U.S. Energy Information Administration - https://www.eia.gov/outlooks/steo/report/petro_prod.php