The Iran war has pushed fuel prices to record highs, and the head of America’s second-largest oil company says the world has run out of easy ways to absorb the shock.
“Those are all buffers in the system that have bought us time, but they’ve been drained,” Chevron CEO Mike Wirth told CNBC’s Squawk Box Europe on Oct. 7. “And so we’re at much lower levels of inventory right now, and it makes the system more vulnerable to disruption.”
Wirth said the world entered 2026 well supplied. “We came into this year with high inventories,” he said, pointing to commercial stocks held by companies and strategic reserves held by governments worldwide. Since the war began in late February, those cushions have been steadily depleted: Companies have drawn down commercial inventories, governments have released emergency stocks, and sanctioned barrels have been allowed to reach buyers.
He called it “a very serious situation.”
Wirth was blunt that stockpile releases are only a stopgap. They “buy time,” he said, but the underlying problem is “constrained flows out of some of the biggest producing areas in the world.”
Diesel relief isn’t coming soon
Nowhere is the squeeze sharper than diesel, the fuel that moves trucks, trains, and farm equipment. The U.S. average hit a record $6.53 a gallon on Sept. 22, according to AAA data cited by CBS News, up from about $3.76 before the U.S. and Israel launched the war in late February. In California, the statewide average has topped $8 a gallon.
Don’t expect that to change quickly. In its October Oil Market Report, released Wednesday, the International Energy Agency said the diesel market will stay tight well into 2027 and hinges on a recovery of fuel supply from the Middle East. Benchmark diesel prices have eased from September’s records above $200 a barrel, but remain nearly double both crude prices and their pre-crisis levels, and the IEA said depleted diesel stocks are unlikely to be rebuilt beyond normal seasonal swings before the second half of 2027.
The agency expects global oil supply to fall by an average of 5.8 million barrels a day this year, to 100.7 million barrels a day, before rebounding in 2027, and sees the market staying in deficit through year-end. It also forecasts that high prices will cut global oil demand by 2.6 million barrels a day in 2026, with diesel accounting for about a quarter of the drop.
Trump’s scramble for supply
With the Nov. 3 midterms less than three weeks away, fuel costs have become a political liability for the White House. An AP-NORC poll published Oct. 1 found that Americans disapprove of President Donald Trump’s handling of the Iran war and blame him for higher prices, Fortune reported.
Trump has tried several levers. In late September, he floated a ban on U.S. diesel exports, telling a Fox News reporter on Sept. 27, “We’re thinking about it very seriously,” while acknowledging it could push gasoline prices up. Refiners warned the policy would backfire, arguing it could force plants to cut output and ultimately tighten domestic supply. Wirth called the idea “unwise,” telling CNBC that “export bans, be they in the U.S. or in other countries, actually take supply off the global market and they run the risk of making the situation worse.”
Trump shelved the idea on Oct. 2, after the Group of Seven, following a pressure campaign from his administration aimed at Europe, agreed to release 100 million barrels of crude and diesel from emergency reserves over four months, with a front-loaded diesel release in the first 20 days. “We’re not going to be doing the export ban,” Trump told reporters that day.
Three days later, he signed an executive order letting truckers and farmers use red-dyed diesel—normally reserved for off-road equipment and exempt from highway fuel taxes—on public roads. The order defers, rather than eliminates, the 24.4-cent-per-gallon federal excise tax through Dec. 31, without interest or penalties, and directs the Treasury to explore ways to cancel the bill entirely. Analysts were skeptical: The waiver “doesn’t add supply globally,” GasBuddy’s Patrick De Haan told Fortune.
Few levers left
Trump’s latest move came Oct. 9, when he announced that Russian President Vladimir Putin had agreed to supply more than 4 million tons of diesel to global markets in stages. The Treasury Department simultaneously issued a general license waiving sanctions on Russian diesel through April 7, 2027.
The deal drew bipartisan backlash in Congress and a sharp rebuke from Ukrainian President Volodymyr Zelensky, who wrote on X that “allowing Russia to sell petroleum products is an investment in a war that must be ended, not prolonged.”
It may not deliver much relief, either. Ukrainian drone strikes on Russian refineries have gutted the country’s fuel output: Russian diesel and gasoil exports fell to about 144,000 barrels a day in September, a decade low, and some analysts doubt Moscow can deliver the volumes Trump announced. The IEA said in its latest report that easing Russian export restrictions is unlikely to materially change the global diesel balance, because the bottleneck is a lack of working refinery capacity.
That brings it back to Wirth’s warning. Stockpile releases, sanctions waivers, and tax breaks can buy time, but they can’t replace the oil and fuel that isn’t flowing out of the Middle East. And with the buffers already spent, there’s little left to cushion the next disruption.
