Europe is importing diesel from Mexico for the first time in seven years as Russian and Middle Eastern supply collapses. Italy has extended its diesel tax cut through September 5 to cushion the impact, while Brent and WTI crude swung on reports that Iran and Oman have resumed talks over the Strait of Hormuz.
Europe's diesel market is stretched so thin that the continent is now pulling imports from Mexico for the first time in seven years. Pemex's Olmeca refinery, also known as Dos Bocas, resumed diesel exports after roughly a decade of inactivity, averaging 36,000 barrels per day between August 2025 and February 2026, shipped mainly to the US and Caribbean until now.
Russian and Middle Eastern supply keeps shrinking
The shift follows a collapse in Europe's traditional diesel routes. Seaborne middle distillate imports from the Middle East Gulf dropped to just 40,000 barrels a day in May 2026, the lowest level in a decade of Vortexa's record-keeping. Russian diesel exports, which accounted for nearly half of Europe's imports before the 2022-2023 conflict, have cratered to roughly 234,000 barrels a day by early July 2026, down more than 70% from the 2025 average of around 817,000 barrels a day.
As a result, Northwest Europe's diesel imports from external regions hit a decade low of about 1.64 million tonnes in April 2026, and May offered little relief. Morgan Stanley and Goldman Sachs have both flagged the elevated risk in European middle distillate markets. Morgan Stanley projects European diesel inventories could fall to around 299 million barrels by November 2026, a multi-year low just as winter heating demand ramps up. Hedge funds have responded by building bullish positions on European diesel futures, and crack spreads in Northwest Europe have surged to record levels.
Italy extends relief at the pump
Governments are moving to shield consumers from the fallout. Italy's cabinet extended its excise duty cut on diesel through September 5, Prime Minister Giorgia Meloni's government said Wednesday. The reduction, worth about €17 per liter, will cost around €130 million in lost revenue. Meloni's office said that once the cut expires, the government may introduce more targeted measures aimed only at lower-income households.
Crude swings on Hormuz talks
Separately, London's FTSE 100 slipped 0.1% on Wednesday, as Shell and BP fell after an earlier 2% drop in global crude oil benchmarks. That drop followed reports that Iran and Oman have resumed bilateral talks to manage and potentially reopen the Strait of Hormuz, easing immediate supply fears and pushing Brent crude futures toward $86 a barrel.
By the latest count, Brent crude and WTI reversed course to trade higher, up 0.8% and 1% respectively.
Sources: Crypto Briefing, Investing.com – Economy News, Investing.com – Commodities & Futures News
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