BMI analysts revealed, in a BMI report sent to Rigzone by the Fitch Group recently, that they had lowered their 2025 average global diesel price forecast to $89 per barrel, “reflecting bearish sentiment dominating the market”.
According to the report, BMI expects the average global diesel price to come in at $87 per barrel in 2026, $85 per barrel in 2027, $84 per barrel in 2028, and $82 per barrel in 2029. The average global diesel price averaged $105 per barrel in 2024, the BMI report showed.
“Global supply continues to outpace demand across key regions, exerting downward pressure on prices,” BMI analysts said in the report.
“Easing geopolitical tensions in the Middle East have contributed to weaker crude prices, which in turn are weighing on diesel prices,” they added.
“Diesel briefly strengthened following a spike in crude oil and refinery closures in Europe. However, we expect European diesel prices to soften in Q4 2025 despite seasonal winter demand,” they continued.
The BMI analysts noted in the report that their outlook “remains bearish for 2025 and 2026, as lower crude prices and modest seasonal demand are unlikely to absorb the prevailing supply glut”.
“This view is supported by ongoing economic weakness in Europe – the world’s largest diesel market – and structural softness in diesel consumption in the U.S. and Asia”.
The analysts highlighted in the report that, in July, Ultra Low Sulphur Diesel prices in New York averaged about $101 per barrel before easing to $98 per barrel in September, adding that the premium over Singapore “widened to roughly $10 per barrel”.
“Singapore and Rotterdam 10ppm prices fell below $85 per barrel, widening their discounts to New York,” they added.
The BMI analysts went on to state in the report that global diesel demand is expected to be driven primarily by non-OECD growth, “with Asia accounting for most of the increase”.
“In the U.S., demand remains resilient, supported by easing retail prices,” they analysts said.
“According to the EIA’s [U.S. Energy Information Administration] weekly data, diesel demand recovered in the first two weeks of October 2025, with total demand rising 20 percent week on week to 4.3 million barrels per day; however, it remains below the level recorded in the same period of 2024,” they added.
“We maintain a constructive demand outlook for Q4 2025 and Q1 2026, underpinned by lower wholesale and retail prices, though it remains to be seen whether this strength will persist through 2025 or develop into a sustained bullish trend in 2026,” they continued.
Looking at the “supply side” in the report, the BMI analysts stated that U.S. refineries “have cut diesel output sharply – from 5.3 million barrels per day in the second week of August 2025 to below 4.6 million barrels per day in early October 2025”.
“Given elevated inventories, it is unlikely that refiners will ramp up production in the near term unless refining margins improve,” they warned.
In a BMI report sent to Rigzone by the Fitch Group back in February, BMI projected that the global diesel price would average $93 per barrel in 2025, $92 per barrel in 2026, and $91 per barrel across 2027, 2028, and 2029. That report showed that the global diesel price averaged $99 per barrel in 2024 and $111 per barrel in 2023.
“Short-term diesel prices are expected to remain supported due to potential refinery closures in Europe, increasing operating capacity in the U.S., and optimization of diesel production by refiners in Mainland China,” BMI analysts stated in that report.
“We expect global diesel demand to be driven primarily by consumption growth in non-OECD countries, with much of this growth occurring in Asia,” they added.
To contact the author, email andreas.exarheas@rigzone.com
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