Europe's imports of diesel and jet fuel have sharply declined due to the ongoing Iran war, according to Bloomberg. The region is heavily reliant on these imports, and the conflict has disrupted critical Middle Eastern supply routes, leading to a significant reduction in diesel exports. This has forced consumers to deplete their existing stocks, pushing European diesel inventories to their lowest levels since 2022.
The situation is compounded by policy decisions from major fuel exporters. China has restricted fuel exports since the war began to conserve supplies, and its future export plans remain uncertain. Additionally, Russia, which was the world's second-largest diesel exporter in 2025, banned diesel exports in July after Ukrainian drone attacks damaged its refining facilities. This ban removed nearly 1 million barrels per day, or about 12% of global diesel exports, from the market. As a result, European diesel crack spreads have surged to a record of nearly $65 per barrel.
The International Energy Agency reports that diesel demand in Europe dropped by over 6% in April to 5.53 million barrels per day, partly due to high prices curbing consumption. Despite this, the damage to inventories is already done, and global LNG and diesel markets are expected to remain undersupplied for months as countries compete to rebuild stocks. This leaves Europe vulnerable to weather conditions, with a harsh winter potentially leading to a severe energy crisis due to low inventories and weak imports.
