UN projects fuel subsidies may top $1 trillion in 2026 amid Iran war

October 2, 2026 at 09:01 AM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Global fuel subsidies could exceed $1 trillion in 2026 as governments shield consumers from energy price spikes driven by the Iran war, a UN Development Programme report projects. The UNDP warns that higher borrowing costs and a record El Niño will make such interventions harder to sustain. The US is separately pressing Europe to release diesel reserves as American diesel prices hit a record $6.50 per gallon.

Key Facts

The UN Development Programme projects global fuel subsidies could cost more than $1 trillion in 2026.
Average US diesel prices hit a record $6.50 per gallon in late September 2026, according to AAA.
US Treasury Secretary Scott Bessent on Thursday urged European partners to accelerate delivery of diesel reserves and make additional supplies immediately available.
The UNDP report released Friday says higher borrowing costs and the strongest El Niño on record will make policy interventions harder to sustain.
President Trump said Thursday he may ask European countries to release diesel reserves, as his administration weighs a diesel export ban.

UN Subsidy Projection

The UN Development Programme report released Friday projects that global fuel subsidies could top $1 trillion in 2026. The report attributes the surge to government interventions shielding consumers from higher energy prices caused by the Iran war and other crises. The UNDP warns that higher borrowing costs and what is on track to be the strongest El Niño on record will make such policy interventions more difficult to sustain. The report says the next couple of months will be particularly important for global policy responses.

US Diesel Pressure

Average US diesel prices surged to a record $6.50 per gallon late last month, according to AAA, up sharply from a year ago. US Treasury Secretary Scott Bessent said Thursday that European partners should accelerate delivery on existing commitments and make additional supplies immediately available to address ongoing disruptions. President Trump told reporters in Texas on Thursday that he may ask European countries to release diesel reserves. The Trump administration is considering a diesel export ban as part of efforts to address high energy prices ahead of the November midterm elections.