Diesel Market Evaluates US Tariff Impacts | USD 329.2 Bn

Overview

New York, NY – April 29, 2025 – ​The global Diesel Market is projected to reach approximately USD 329.2 billion by 2034, up from USD 226.7 billion in 2024, growing at a compound annual growth rate (CAGR) of 3.8% during the forecast period from 2025 to 2034.

In 2024, 2 diesel fuel captured a dominant 71.2% revenue share due to its widespread use across industries. The diesel market is segmented by application into passenger vehicles, commercial vehicles, and others. In 2024, commercial vehicles held a commanding 58.6% market share, driven by growing global demand for transportation and logistics. The diesel market is divided into railway, automotive, marine, and other. In 2024, the automotive sector led with a 58.3% market share.

US Tariff Impact on Diesel Market

In 2025, the U.S. implemented a 10% tariff on Canadian energy imports, including diesel, leading to price increases of 20 to 40 cents per gallon in the Northeast. This tariff has prompted Canadian refiners to redirect diesel exports to Europe. Additionally, a 25% tariff on imported vehicles and parts has increased production costs in the automotive sector. These tariffs have disrupted supply chains, increased operational costs, and affected pricing structures in the diesel market.​

Key Takeaways

• The global diesel market was valued at USD 226.7 billion in 2024.
• The global diesel market is projected to grow at a CAGR of 3.80% and is estimated to reach USD 329.2 billion by 2034.
• Among types, 2 diesel fuel accounted for the largest market share of 71.2%.
• By application, commercial vehicles accounted for the largest market share of 58.6%.
• By end-use, automotive accounted for the majority of the market share at 58.3%.
• Asia Pacific is estimated as the largest market for Diesel with a share of 43.4% of the market.

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Analyst Viewpoint

The Diesel Market in the Asia Pacific, which held a 43.4% global share in 2024, offers compelling investment opportunities, particularly in cleaner diesel technologies and infrastructure. With rapid industrialization in countries like China and India, demand for diesel-powered machinery in construction, agriculture, and transportation remains robust.

The shift toward Ultra-Low Sulfur Diesel (ULSD) and renewable diesel, spurred by government incentives for net-zero goals, opens avenues for investing in refining upgrades and biofuel production. For instance, renewable diesel production is expected to surge as governments push blending mandates, potentially increasing capacity.

Risks loom large. Fluctuating crude oil prices and new refining capacities in China and India could depress diesel margins, with Asian diesel cracks projected to hover. Additionally, the global pivot to electric vehicles (EVs) and stricter emissions regulations could shrink long-term diesel demand, especially in passenger vehicles, making investments in traditional diesel riskier.

Report Scope

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Key Market Segments

Product Analysis

• The diesel market is segmented by type into 1 diesel fuel, 2 diesel fuel, and others. In 2024, 2 diesel fuel captured a dominant 71.2% revenue share due to its widespread use across industries. Its high energy content and efficient performance make it ideal for commercial and industrial applications, such as trucks, construction equipment, and heavy machinery, where reliability and power are critical for extended operations.

Application Analysis

• The diesel market is segmented by application into passenger vehicles, commercial vehicles, and others. In 2024, commercial vehicles held a commanding 58.6% market share, driven by growing global demand for transportation and logistics. Trucks, buses, and delivery vans, essential for goods movement and public transit, underpin the global economy. The rise of e-commerce, urbanization, and expanding supply chains has increased the need for commercial vehicles, boosting diesel fuel consumption.

End-Use Analysis

• By end-use, the diesel market is divided into railway, automotive, marine, and others. In 2024, the automotive sector led with a 58.3% market share, fueled by the widespread use of diesel-powered vehicles globally. Diesel engines are favored for their fuel efficiency, high torque, and durability, offering better mileage than their gasoline counterparts. This makes diesel-powered cars, trucks, and SUVs popular for cost-effective, long-distance travel, particularly in regions like Europe and parts of Asia.

Regional Analysis

• The Asia Pacific region led the global diesel market, commanding a 43.4% share, fueled by rapid industrialization, infrastructure growth, transportation demands, and power generation needs. Governments in the region are promoting clean energy transitions and net-zero emissions targets, driving research and development in the diesel sector.
• Innovations like Ultra-Low Sulfur Diesel and LNG-Diesel dual-fuel engines align with these environmental goals, supporting zero-emission initiatives. Additionally, the rising adoption of biodiesel and renewable diesel is boosting demand in both public and private sectors, as these eco-friendly alternatives gain popularity for meeting sustainability targets.
• Economic growth and industrialization in countries such as China, India, Vietnam, and Australia significantly contribute to diesel demand. Key sectors, including construction, mining, agriculture, and transportation, rely heavily on diesel-powered equipment. Major infrastructure projects, such as bridges, highways, and railways, further increase the need for diesel-fueled machinery critical for heavy-duty operations, underscoring diesel’s vital role in economic development and modernization.
• The growing dependence on diesel-powered generators is another key driver of market growth. In countries like India, Indonesia, and Australia, where power outages are common, diesel generators provide a reliable energy source for critical sectors like hospitals, industries, and data centers.

Top Use Cases

• Transportation: Diesel fuel is essential for powering heavy-duty vehicles like trucks, buses, and trains. Its high energy density and fuel efficiency make it ideal for long-haul transportation, ensuring goods and passengers are moved efficiently across vast distances. This reliability supports global supply chains and public transit systems.​
• Construction: In the construction industry, diesel powers machinery such as excavators, bulldozers, and cranes. These machines require robust engines capable of handling heavy loads and continuous operation. Diesel’s torque and efficiency make it the preferred fuel, enabling the development of infrastructure projects worldwide.​
• Agriculture: Diesel is widely used in agriculture to operate tractors, harvesters, and irrigation pumps. Its ability to provide consistent power in remote areas without access to electricity makes it indispensable for farming activities, from planting to harvesting, thereby supporting food production and rural economies.​
• Power Generation: Diesel generators serve as reliable power sources, especially in areas lacking stable electricity grids. They are commonly used for backup power in hospitals, data centers, and during emergencies. Diesel’s quick start-up and energy density ensure uninterrupted power supply when it’s most needed.​
• Mining: The mining sector relies on diesel to fuel heavy equipment like haul trucks and drills. These machines operate in challenging terrains and require a dependable energy source. Diesel’s robustness and availability make it suitable for continuous mining operations, contributing to the extraction of essential minerals.

Recent Developments

1. Chevron Corporation (Hess)

• Chevron has been investing in renewable diesel production to meet low-carbon fuel demands. The company expanded its partnership with Bunge to increase renewable diesel feedstock supply. Chevron aims to produce 100,000 barrels per day of renewable fuels, including renewable diesel from soybean and other vegetable oils.

2. Exxon Mobil Corporation

• ExxonMobil is advancing diesel production with lower emissions by using carbon capture and biofuels. The company plans to increase renewable diesel output at its Strathcona refinery in Canada, targeting 20,000 barrels per day. Exxon is also testing Fischer-Tropsch technology to produce synthetic diesel from natural gas.

3. PetroChina Company Limited

• PetroChina has been optimizing diesel production to meet China’s growing demand while reducing sulfur content. The company launched China VI-standard diesel, which has ultra-low sulfur levels (10 ppm). PetroChina is also exploring biodiesel blends to cut emissions.

4. Qatar Petroleum (Now QatarEnergy)

• QatarEnergy is investing in gas-to-liquids (GTL) diesel, producing cleaner diesel from natural gas. The Pearl GTL plant, a joint venture with Shell, continues to be a major producer of high-quality GTL diesel, which burns cleaner than conventional diesel.

5. Shell Plc.

• Shell is expanding its renewable diesel production, with new facilities in Singapore and the Netherlands. The company aims to produce 2 million tonnes of sustainable aviation fuel (SAF) and renewable diesel annually. Shell also introduced carbon-neutral diesel in Europe, offsetting emissions via nature-based credits.

Conclusion

The Diesel Market is poised for steady growth. This growth is driven by sustained demand across key sectors such as transportation, construction, agriculture, and power generation, where diesel’s efficiency and reliability remain indispensable. The expansion of infrastructure projects in emerging economies further bolsters diesel consumption, particularly in heavy machinery and equipment. However, the market faces challenges from the increasing adoption of electric vehicles and stringent environmental regulations, prompting a shift towards cleaner diesel technologies and alternative fuels.

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