The diesel crack has pushed back above $100 a barrel after President Trump rejected Iran's peace proposal, even as crude oil itself trades sideways. The squeeze is coming from tight refined-product supply, not from crude, and the coming weeks may matter more than the ones just passed.
Crude is not spiking, but the products made from it are. The diesel crack is back over $100 a barrel after Trump rejected Iran's so-called peace proposal, while WTI and Brent continue to chop sideways. The spread is widening because the product market is tight, not because crude is running away.
Middle East barrels are recovering, not fully reopening
Middle East oil exports rebounded to about 12.8 million barrels a day in September, the highest level since the war began in late February, according to Kpler data, though still roughly six million barrels a day below the pre-war pace. Flows through the Strait of Hormuz are on track for about 7.4 million barrels a day this month. Nineteen VLCCs carrying Saudi crude passed the strait last week. Ras Tanura loadings jumped to about 3.6 million barrels a day from under a million in August. Saudi exports as a whole are running near 5.4 million barrels a day. After mid-September drone strikes shut Yanbu loadings, sources say the Petroline pipeline has been restarted at reduced rates, though a full return is still weeks away.
Russia's missing diesel keeps Europe's crack wide
Russia remains the missing barrel. Ukrainian strikes have cut Russian refining runs. Reports say Moscow's diesel export ban is being extended through late October. Citing Argus, the Financial Times reported that Europe's diesel crack cleared $100 a barrel against North Sea crude, a level Argus called unprecedented, with southern Europe printing above $104 earlier this week.
US pump prices hit fresh records
US distillate inventories have been running twelve to fourteen percent below the five-year average, with East Coast stocks especially tight. The US diesel crack punched through $100 a barrel in August and posted record closes near $103 to $108 in early September. Front-month Nymex ULSD futures fell more than 7% in the week ended September 25, settling near $4.68 a gallon, even though the physical shortage barely moved. AAA put the national average diesel price at about $6.47 a gallon this morning, near last week's record close to $6.53, up from $5.61 a month ago and $3.69 a year ago. Regular gasoline is about $4.48 a gallon, roughly unchanged on the week but 39 cents higher than a month ago.
The crack will keep doing the market's work until one of its pressure valves opens: a Russian diesel restart, normalized Hormuz and Gulf flows, a genuine US inventory rebuild, or turnarounds ending without new outages. Until then, crude can sag while diesel stays expensive.
Source: Commodities Analysis & Opinion
Trading involves risk.
Risk Disclaimer
