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Diesel shortage may persist beyond the Middle East conflict, driven by low inventories, sanctions on Iran, and reduced refining capacity

Executive summary: Diesel supplies are tightening as global inventories fall, refining capacity is reduced, and the United States has threatened Iran with its toughest sanctions in history. Lower diesel availability raises fuel prices for freight, shipping and agriculture, which can increase transport costs and contribute to inflation.

Who is involved: Major oil consumers, refiners, governments (especially the US and Iran), and international energy agencies.

Likely next: Market participants expect possible releases of strategic reserves, diplomatic efforts to ease sanctions, and continued volatility in diesel prices.

Global diesel inventories are low amid refining capacity constraints and fresh US sanctions threats against Iran, raising concerns that fuel shortages could persist beyond the ongoing Middle East conflict. The situation threatens to push up transport and logistics costs, potentially feeding broader inflationary pressures. Governments and industry actors are monitoring stockpiles and considering policy responses such as strategic reserve releases or excess profit taxes.

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