OddsFrontUS energy agency raises 2027 diesel forecast to $4.40 a gallon
Low distillate inventories and disrupted supplies from the Middle East, Russia and China point to elevated transport and agricultural costs extending well into next year.
Fuel pressure extends into 2027
The US Energy Information Administration has raised its forecast for the average retail diesel price in 2027 to $4.40 a gallon, an increase of 33 cents from its previous monthly estimate. It also lifted the 2026 forecast by 22 cents to $5.07. The revision indicates that the effects of constrained global fuel supplies may persist beyond the immediate volatility created by the Middle East conflict.
The agency identified unusually low US inventories of distillate fuel, the category that includes diesel and heating oil, as the central problem. It expects stocks to fall below 100 million barrels in September and to remain below the five-year seasonal range through much of 2027. Refinery maintenance, winter heating demand and agricultural consumption could make the shortage more acute over the coming months.
Supply losses from the Middle East, Russia and China are combining with strong US exports. The global nature of the squeeze is visible in Europe as well: Sky News reported Brent crude above $100 a barrel and sharply higher wholesale gas prices in Britain. Diesel can rise faster than crude because its price also reflects refinery capacity, product inventories and competition for finished fuel.
The forecast depends on reopening trade routes
The EIA’s central scenario assumes that tanker traffic through the Strait of Hormuz normalises in the near term, allowing Saudi and Kuwaiti refineries to ship more distillate. It also assumes improved crude availability for East Asian refiners. If those flows remain constrained beyond the end of 2026, the agency says refining margins and fuel prices could stay higher than its current forecast.
The White House has presented its military control of Hormuz and protected commercial transits as evidence that energy is still moving. That is the administration’s account and should not be confused with a guarantee of stable prices. Market reporting shows that conflict risk, damaged tanker capacity and uncertainty about further attacks continue to command a substantial premium.
Monthly forecasts will change as inventories, refinery output and shipping conditions evolve. The most important near-term indicators are whether US distillate stocks breach the projected 100-million-barrel threshold, whether maintenance outages end on schedule and whether Gulf product exports recover. For households and businesses, prolonged diesel inflation would feed directly into freight, farming, construction and heating costs during 2027.