Diesel Price Forecast Winter 2026–27: Will Diesel Prices Go Down?

Will diesel prices go down this winter?

The main forecasters expect diesel to get cheaper, but slowly and from very high levels. The US Energy Information Administration (EIA) forecasts retail diesel at $5.81 a gallon on average in the fourth quarter of 2026 ^[1]. It then expects $4.92 in the first quarter of 2027 and $4.49 on average over 2027 ^[1].

Pump prices today are higher than that winter average. US retail diesel was $6.352 a gallon on 26 October, $2.634 higher than a year earlier ^[2]. The EIA expected prices to stay above $6 in October, then fall gradually with crude oil and a slight recovery in stocks ^[1]. Its monthly path, as reported by Energy News Beat, shows $5.79 in November and $5.06 in January ^[4].

In Europe, the EU average pump price for diesel was €2.146 a litre in the week of 26 October ^[10]. That was 40.4% higher than a year earlier ^[10]. The record was €2.24 on 28 September ^[19]. The European Central Bank (ECB) also expects energy prices to ease. Its September baseline had energy inflation falling from almost 15% at the end of 2026 to about −4% a year later ^[17]. That baseline builds in the decline in energy prices implied by futures curves ^[17].

The EIA has raised its diesel outlook in each of its last two reports. In September it lifted its 2027 average from $4.07 to $4.40 a gallon ^[3]. In October it raised it again, to $4.49 ^[1].

What do futures markets say about diesel prices?

Futures prices slope steeply downwards, a structure known as backwardation. It means traders pay more for prompt diesel than for later deliveries. On 13 October, NY Harbor ultra-low sulphur diesel (ULSD) futures settled at $4.9344 a gallon for November 2026 ^[4]. January 2027 settled at $4.6766 and December 2027 at $3.5877 ^[4].

Energy News Beat adds a fixed retail mark-up of $1.33 a gallon to turn these into pump prices. On that basis the curve implied about $6.01 in January and $4.92 by December 2027 ^[4]. It notes the EIA expects retail margins to widen in 2027, which would keep pump prices above those estimates ^[4].

European gasoil futures show the same pattern. In September, Saxo Bank's Ole Hansen pointed to "extraordinary backwardation" in these markets ^[7]. The ECB's account of its September meeting noted that the price and futures curve of gas oil had moved up significantly ^[17]. It put diesel margins above $70 a barrel, more than three times the pre-war level ^[17].

How low are diesel stocks going into winter?

Stocks are the main reason forecasters expect only a gradual decline. US distillate inventories fell by about 1.5 million barrels to 102.8 million barrels in the week to 23 October ^[6]. That is about 10% below the five-year average ^[6].

The EIA expects total US distillate stocks to end 2026 at 113.3 million barrels, against 128.2 million a year earlier ^[1]. On the East Coast, inventories were 32% below their five-year seasonal average in September ^[1]. The EIA expects them to stay 20% to 30% below average this winter, because importers will struggle to find extra cargoes ^[1].

The global picture is similar. The International Energy Agency (IEA) estimates that observed oil stocks were 509 million barrels below pre-war levels at the end of September ^[15]. It says lost diesel stocks are unlikely to be rebuilt, beyond normal seasonal swings, before the second half of 2027 ^[5]. In the Amsterdam–Rotterdam–Antwerp (ARA) hub, gasoil stocks averaged 13.33 million barrels in October to date, up 744,000 barrels on September ^[14].

What happens to European pump prices after 31 December?

For European drivers, taxes matter as much as wholesale prices this winter. Several temporary cuts are due to end around the turn of the year.

Germany cut its energy tax on diesel by 14.04 cents a litre from 1 October to 31 December ^[11]. If the normal rate returns, pump prices would rise by about 16.7 cents a litre once value-added tax (VAT) is added ^[11]. Berlin also aims to introduce a fuel price cap by 1 January 2027 at the latest ^[12].

Spain's hydrocarbon tax cut steps down in November and December and ends on 1 January unless renewed ^[11]. Poland's reduced 8% VAT on fuel runs to 31 December ^[19]. If pre-tax prices stayed unchanged, a return to 23% VAT would add about 25 cents to Poland's €1.781 litre (Alupetra calculation) ^[10,19]. Ireland is restoring its excise cut in four steps, adding 7 to 8 cents a litre each time between November and February ^[11].

The UK is the exception. In the 28 October Budget, the Chancellor extended the 5p fuel duty cut to July 2027 ^[13]. Duty stays at 52.95p a litre, so the 3p rise planned for January will not take effect before July ^[13].

Can Russia, reserves and new supply bring relief?

Russia is easing its restrictions, but slowly. Reuters reported on 29 October, citing sources, that the diesel export ban will be extended to the end of the year ^[9]. Quotas for exempt producers would rise to 2 million tonnes in November, about 0.5 million barrels a day ^[9]. Sources also said refinery utilisation rose 25% during October as drone attacks subsided ^[9].

Analysts doubt this will change the balance much. Goldman Sachs does not expect Russia's planned releases to have a significant effect on global diesel prices ^[8]. The IEA said easing Russian exports was unlikely to materially alter the gasoil market ^[4].

Emergency stocks may do more. On 15 October the IEA agreed to speed up the release of about 100 million barrels ^[15]. More than 20 million barrels of that is diesel ^[15]. Goldman estimates that a 50-million-barrel diesel release from European stocks could cut wholesale prices by about $11 a barrel ^[8].

New refining capacity is further away. S&P Global no longer expects Middle East crude and refining to return to pre-war levels before the end of 2027 ^[7]. In the US, Valero plans to restart part of the former LyondellBasell Houston refinery by the end of 2027 ^[18].

Base case, upside and downside: what forecasters say

Base case. The EIA assumes Middle East flows stay constrained through the fourth quarter but rise gradually through convoys and bypass routes ^[1]. On that basis it sees Brent at $105 a barrel in the fourth quarter and $84 next year ^[1]. Diesel cracks fall but stay high, keeping US retail prices above $4 a gallon through 2027 ^[1]. The IEA expects gasoil tightness to extend into 2027 ^[4].

Upside risks. The IEA says renewed attacks in the Gulf leave the recovery fragile ^[5]. It warned that delivered diesel prices in Europe, Africa and Latin America could rise again within weeks ^[5]. Iran's Revolutionary Guard said a tanker hit a mine in the Strait of Hormuz ^[16]. UK Maritime Trade Operations said a tanker was struck by explosives on Thursday night ^[16]. S&P Global expected diesel cracks to average about $84 a barrel for the rest of 2026 ^[7]. Goldman said diesel and jet margins could average above $40 a barrel next year ^[8].

Downside risks. Diplomacy is the main route to lower prices. Qatari mediators have returned to Tehran, and President Trump said the war would "be wrapped up soon" ^[16]. Larger stock releases and rising Russian export quotas could also add supply, although Goldman expects little effect from Russia ^[8,9]. The EIA notes that retail margins should widen in 2027, so falls in wholesale prices may reach the pump only partly ^[1].

What to watch

• The Strait of Hormuz. Tanker incidents and US–Iran talks will drive both crude prices and diesel cracks ^[16].
• The EIA's November outlook. The next Short-Term Energy Outlook is due on 10 November ^[4].
• Russia's November order. It should set the new export limits and list of exempt refiners ^[9].
• Year-end tax decisions. Watch whether Germany, Spain and Poland extend their relief, and how the German price cap works ^[11,12].
• Weekly stocks. US distillate data and ARA gasoil stocks will show whether inventories rebuild as heating demand rises ^[6,14].

Alupetra trades diesel and gasoil cargoes against written specifications and tracks futures, cracks and pump prices daily in its market coverage.