America raises its diesel price forecast for 2027 again; the middle distillates crisis will reach next year
The average price of diesel in the U.S. for 2027 will be about $4.49 per gallon; this is the latest forecast from the U.S. Energy Information Administration in its October report, which is higher than last month's estimate. This figure is higher than last month's estimate. At the same time, the forecast for Brent oil prices for next year has increased by 14 percent. According to this agency, the shortage of diesel reserves will continue at least until the second half of 2027.
According to the U.S. Energy Information Administration (EIA) in the 'Short-Term Energy Outlook' report published on October 6, 2026, diesel prices in the U.S. will remain above pre-war levels until 2027. The EIA estimates the average retail price of diesel for 2026 to be about $5.19 and for 2027 about $4.49 per gallon (close to $1.19 per liter). This figure for 2027 is about one dollar higher than the pre-war forecast ($3.47). The main reason is the shortage of middle distillate reserves, which this agency states will remain below the five-year average until the second half of 2027. Supply constraints from the Middle East, Russia, and China and the forecast for Brent oil prices are contributing factors.
The Short-Term Energy Outlook (STEO) report was released on October 6, 2026. Its model inputs were finalized on October 1, and the next release is scheduled for November 10. According to the changes table in this report, the average retail price of diesel in 2026 is now estimated at $5.19 and in 2027 at $4.49 per gallon. These two figures were $5.07 and $4.40 in the previous report, respectively. One gallon is approximately 3.79 liters. Therefore, the 2027 forecast is roughly equivalent to $1.19 per liter.
"Second consecutive upward revision" ← "Diesel price 2027; second consecutive upward revision"
This increase continues a trend. The EIA had also raised its 2027 forecast from $4.07 to $4.40 in the September report, citing low inventories and strong global demand. The gap from pre-war expectations is larger. This agency had predicted that the average price of diesel in the U.S. in 2027 would be around $3.47 before the war. The current estimate is about one dollar, or nearly 29 percent, higher than that figure.
Actual prices also reflect this pressure. In September, the average price of diesel in the U.S. reached $6.29 and gasoline $4.35 per gallon. The EIA attributed this jump to rising crude oil prices and increased crack spreads. For comparison, the previous record for weekly diesel prices in the U.S. was $5.81, set in the week of June 20, 2022.
Main concern: middle distillate inventories
The most important variable in this report is the state of inventories. Middle distillate inventories on the East Coast of the U.S. were 32 percent below the five-year seasonal average in September. The EIA expects these inventories to remain about 20 percent below the 2021-2025 average throughout the upcoming winter and only approach the five-year average in the second half of next year.eia
According to the EIA, this shortage is due to lost supply from the Middle East, Russia, and China. High net exports from the U.S. have also exacerbated it. The season is not favorable for the market either, as refinery turnarounds reduce production just as agricultural and winter demand rises.
When diesel raises crude oil prices
A notable technical point in the report is that the usual relationship has reversed. The EIA attributes part of the upward pressure on crude oil prices to the severe tightness in the diesel market. Refineries need more feedstock to meet diesel demand, which in turn raises crude oil demand. For this reason, the Brent forecast for the fourth quarter of 2026 has risen to $105 per barrel, which is $14 higher than the previous report. The average for 2027 is also estimated at $84, while it was $74 the previous month.
Persian Gulf and Strait of Hormuz assumptions
The EIA assumes that oil flows from the Middle East will remain constrained until the end of the fourth quarter of 2026. However, regional shale production in September has reached its lowest level since the onset of the conflicts. A combination of tanker escorts in the Strait of Hormuz, alternative routes, and increased ship-to-ship transfers is expected to gradually boost regional production and exports. At the same time, this agency views attacks on the East-West pipeline in Saudi Arabia as a sign of the potential for continued volatility in physical oil flows.
There is also an important caveat. This forecast takes into account the exchange of 40 million barrels of crude oil from the U.S. Strategic Petroleum Reserve announced on September 29, but does not consider the impact of the October 2 statement from the Group of Seven. Therefore, the November report may present a different picture.
Why is it important?
The consecutive revisions by the EIA indicate that the crisis is no longer just in crude oil but has reached the refining and products chain. Middle distillates are fuels for heavy transportation, agriculture, and heating, so their rising prices are transferred to commodity inflation with a delay. For regional refineries that produce a high share of middle distillate products, this situation means continued high profit margins. However, the condition for exports is the continued openness of Gulf routes.
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