In a BMI report despatched to Rigzone by the Fitch Group on Friday, BMI analysts revealed that they’d elevated their international diesel value forecast for this 12 months.
“We now have revised up our 2026 diesel value forecast, as we transfer to our ‘lengthen to finish’ [conflict] state of affairs, which calls for an additional 4 weeks of hostilities,” the BMI analysts mentioned within the report.
“The worldwide common diesel value is now forecast to be $111 per barrel versus our earlier view of $89 per barrel,” they added, declaring that this was an increase of 25.1 p.c.
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The analysts said within the report that the escalation within the Center East has sharply tightened the worldwide diesel market and compelled a big reassessment of the near-term value outlook.
“In our view, the current rally displays greater than greater crude enter prices,” they mentioned.
“The extra vital driver has been disruption to refined-product commerce flows, tighter transport availability, rising freight and insurance coverage prices, and a sudden deterioration in immediate provide circumstances,” they famous.
“Diesel markets are particularly weak to the sort of shock as a result of center distillates are closely depending on seaborne commerce from the Center East,” they warned.
The analysts outlined within the report that diesel costs are anticipated to stay elevated over the subsequent 4 weeks “earlier than a cessation of open hostilities reduces costs sharply as the majority of the danger premium for the battle abates”.
“The U.S.-Iran battle is predicted to proceed for an additional 4 weeks (as much as eight weeks whole from February 28, 2026) with high-intensity operations in accordance with our Nation Threat group,” the BMI analysts highlighted.
“Nonetheless, the battle stays contained – i.e., it doesn’t spiral into uncontrolled, region-wide warfare and a diplomatic off-ramp stays viable. In our ‘lengthen to finish’ state of affairs, the battle lasts round eight weeks (vs ~4 beforehand), elevating dangers to infrastructure, prolonging disruption by the Strait of Hormuz, and lengthening restoration,” they added.
“Because of this the diesel provide shortfall is bigger and extra persistent than initially anticipated on condition that Gulf spare capability is itself constrained by Hormuz entry,” they continued.
“With Gulf crude and gas manufacturing cuts exceeding 10 million barrels per day and Hormuz flows dropping from ~20 million barrels per day to ~2 million barrels per day (solely ~3.5-4.5 million barrels per day rerouted), we assume an implied deficit of ~13 million barrels per day+ that’s met primarily by way of stock drawdowns, with tightness extending past the battle window,” they went on to state.
The BMI analysts famous that this helps their improve of the 2026 annual common Brent forecast to $78 per barrel, from a earlier prediction of $70 per barrel. They outlined, nevertheless, that dangers are “skewed huge; from a sooner ceasefire and retracement, to escalation outcomes round $85-110 per barrel and a tail danger of $100+ per barrel annual averages below a multi-month engagement”.
“Nonetheless, the value positive factors seen throughout the refined fuels advanced have outpaced these of Brent as the provision disruptions have been extra impactful in key import dependent markets notably these in Asia,” the analysts identified.
Within the report, the analysts projected that the worldwide diesel value will common $111 per barrel this 12 months, $98 per barrel in 2027, $93 per barrel in 2028, $91 per barrel in 2029, and $90 per barrel in 2030. The report confirmed that this value got here in at $91 per barrel final 12 months and highlighted that the spot value was $166 per barrel.
In a BMI report despatched to Rigzone by the Fitch Group on February 2, BMI analysts introduced that they’d raised their international common diesel value by 2.3 p.c to $89 per barrel from their earlier forecast of $87 per barrel “as geopolitical tensions assist greater costs to begin 2026”.
“Weaker Brent costs in 2026 will suppress international diesel value upside with margins persevering with to contract on tepid demand development and new provide,” the BMI analysts projected in that report.
“Lengthy-term diesel costs will likely be ruled by the gradual easing of the structural oversupply as markets ultimately transfer to undersupply by 2031,” they added.
That BMI report forecast that the worldwide diesel value would common $89 per barrel this 12 months, $93 per barrel in 2027, $90 per barrel throughout 2028 and 2029, and $89 per barrel in 2030.
To contact the writer, electronic mail andreas.exarheas@rigzone.com
