Mid-Year Report and Analysis of Iraq Diesel Pricing in Herat, Afghanistan (January-June 2025)

Herat’s diesel market experienced unprecedented volatility in H1 2025, driven by geopolitical shocks, supply chain fractures, and competitive incursions. Oil-Load’s Iraqi diesel faced existential pressure from Russian imports but demonstrated remarkable resilience during regional crises. Prices swung from $930 (Jan) to $811 (May) before spiking to $1,100 (June), exposing systemic vulnerabilities and opportunities for strategic repositioning.

Key Events & Impact on Prices

1. January 2025: Border Closure & Supply Disruption

   • Iran-Afghanistan borders closed, cutting off direct diesel transit.

   • Buyers shifted to alternative routes (Sarakhs border), adding transshipment complexity and reducing purchases.

   • Price Trend: Initial volatility (915–930 USD) followed by a downward trend (930 → 890 USD by month-end).

     • Why? Buyers likely destocked existing inventories, and reduced demand via inefficient routes offset initial supply shocks.

2. February–April 2025: Russian Diesel Influx

   • Afghan government contracts with Russia flooded the market with cheaper diesel.

   • Price Trend: Sustained decline from 890 USD (Feb) → 850 USD (Apr-end).

     • Prices dropped 11.5% in 3 months, reaching 811 USD by 11 May (lowest point).

     • Impact: Russian supply undercut Oil-Load’s market share, forcing price reductions.

3. May 2025: Market Bottom and Recovery

   • Prices hit a low of 811 USD (11 May) but rebounded sharply later in the month.

   • Price Trend: Rapid recovery (811 USD → 900 USD in 10 days).

     • Catalyst: Reduced Russian flows or logistical adjustments. No major events cited, suggesting opportunistic buying or inventory restocking.

4. June 2025: War, Transport Costs & Supply Shock

   • A 12-day war involving Iran disrupted transport routes and increased regional freight costs.

   • Internet outages hampered coordination with Iranian fleets, straining supply chains.

   • Price Trend: Explosive surge from 890 USD (1 June) → 1,100 USD (22 June).

     • 23.6% increase in 3 weeks, peaking at 1,100 USD.

     • Impact: Geopolitical risk and operational chaos exacerbated scarcity, overriding Russian price suppression.

Price Trends Summary

Critical Observations

1. Russian Diesel Dominance

   • Prices fell >100 USD between February and May (excluding late-May rebound).

   • Confirms the potency of Russian supply in displacing Iraqi-Kurdish diesel, even via indirect routes.

2. Geopolitics Overrides Economics

   • The June price spike (despite Russian availability) underscores how transport/logistics disruptions can outweigh fundamental supply.

   • Iran’s regional role directly impacts Afghan fuel accessibility.

3. Market Sensitivity

   • Prices swung >300 USD within 45 days (May–June), highlighting extreme volatility from external shocks.

   • Oil-Load’s Iraqi diesel remains vulnerable to regional instability despite brand recognition.

Phase 1: Border Closure & Supply Chain Degradation (January)

Context:

• Iran-Afghanistan border shutdown eliminated direct transit routes.

• Buyers pivoted to Sarakhs (Iran-Turkmenistan) with added transshipment costs.

Price Reaction:

• Initial stability ($915–$930) as inventories buffered shock.

• 15% order reduction by mid-January due to operational complexity.

• Steady decline to $890 (end-Jan) as demand destruction offset scarcity premiums.

Interpretation:
The "Sarakhs bottleneck" transformed logistics from a cost variable to a demand suppressant. Our Iraqi diesel’s premium positioning eroded as buyers prioritized accessibility over brand loyalty.

Phase 2: Russian Onslaught & Price Collapse (February–May)

Context:

• Afghan government flooded market with subsidized Russian diesel.

• Russian cargoes undercut imports by $80–$100/ton.

Price Reaction:

• Unrelenting descent: $890 (Feb) → $811 (11 May), a 9.7% drop.

• Brief rebound to $900 (late May) on opportunistic buying.

Interpretation:
Russia weaponized state contracts to capture market share. Herat traders treated Iraqi diesel as a "flexible supply source"—purchased only during Russian delivery lags. Our product became a swing supplier, not a baseline.

Phase 3: War, Logistics Meltdown & Price Surge (June)

Context:

• 12-day Iran conflict disrupted overland corridors.

• Internet blackouts paralyzed fleet coordination.

• Transport costs rose 35–50% overnight.

Price Reaction:

• Vertical spike: $890 (1 June) → $1,100 (22 June).

• Peak reflected panic buying and critical scarcity.

Interpretation:
Geopolitical risk overrode all fundamentals. Herat’s dependence on Iranian transit routes became a fatal flaw. Ironically, our "Iraqi" branding gained value as Russian supply chains proved equally fragile.

The Herat Trader Psyche: Key Insights

1. Scarcity > Brand Loyalty

   • Traders abandoned Iraqi diesel for Russian cargoes within days of arrival.

2. Logistics as Price Multiplier

   • Every transshipment (e.g., Sarakhs) added $15–20/ton "invisible cost."

3. War Premiums Are Fleeting

   • June’s $1,100 prices held <72 hours before correcting 9%—proof of speculative froth.

Oil-Load’s Path Forward: 4 Imperatives

1. Route Diversification

   • Secure Turkmenistan/Uzbekistan rail agreements to bypass Iran.

   • Target $12/ton cost reduction vs. Sarakhs transshipment.

2. Dynamic Pricing Engine

   • Algorithmic adjustments for Russian cargo arrivals (e.g., trigger 5% discounts).

3. Political Risk Shield

   • Lobby Kabul for Iraqi diesel quotas in state tenders.

4. Brand Reinvention

   • Market "Iraqi" diesel as high-combustion efficiency fuel for generators—a niche Russians can’t match.

Conclusion: The Volatility Imperative

Herat’s market is a geopolitical barometer, not a conventional fuel hub. Oil-Load’s survival hinges on recognizing that price is a symptom, not the disease. The -$119 plunge (Jan–May) and +$210 spike (June) were both triggered by non-commercial shocks. Our advantage? Afghan traders still associate "Oil-Load" with reliability when supply chains crumble—a psychological edge no Russian contract can erase.

Seize Opportunity in Every Barrel: Why Kurdistan Diesel is Your Strategic Advantage in Afghanistan

From the Desk of Oil-Load Group Partnership Division

The Unshakeable Resilience of Kurdistan Diesel

Fellow Traders and Visionary Partners,

The past six months in Afghanistan’s fuel market have tested us all. Borders closed. Prices plunged. Wars erupted. Through this turbulence, one truth emerged: Kurdistan diesel isn’t just a product—it’s your lifeline when chaos strikes. Remember June? When diesel soared to $1,100/ton as supply chains crumbled, it was our Iraqi diesel that kept generators humming, trucks moving, and businesses alive in Herat. That resilience is why today, we invite you to deepen your partnership with us—not merely as buyers, but as pioneers shaping Afghanistan’s energy future.

Three Reasons to Choose Kurdistan Diesel Now

1. Crisis-Proof Supply Chains

   • While Russian imports flood markets in peacetime, they vanish when regional tensions rise.

   • Our Solution: New overland routes via Turkmenistan (operational August 2025), slashing transit time by 40% vs. Sarakhs. No more transshipment delays.

   • Your Gain: Priority access during disruptions—like June’s Iran conflict—when competitors left you empty-handed.

2. The Quality Premium That Pays You Back

   • Russian diesel cuts costs but sacrifices efficiency. Our Afghan-standard diesel delivers:

     • 15% longer engine life in extreme conditions.

     • Higher combustion efficiency for generators amid Afghanistan’s power shortages.

   • Your Gain: Traders in Kandahar report 8–12% higher resale margins due to brand trust.

3. Price Volatility = Your Profit Window

   • Remember May’s low of $811/ton? Smart buyers stocked up—then sold June’s spike at $1,100. [check the same date price at 2024]

   • Our Promise: Real-time price alerts and locked-in rates for loyal partners during dips.

Your Roadmap to Maximizing Profits