The U.S. diesel crack spread topped $100 a barrel for the first time on record after Iran said it would adopt a "fully offensive" stance and Washington refused to extend its ceasefire with Tehran. Brent crude and WTI both climbed to multi-week highs, while a global refinery shortfall and a Russian export ban squeeze fuel supply further.
Oil prices jumped and refining margins broke a historic threshold after the U.S. refused to extend its ceasefire with Iran this week. Brent crude traded at $91.33 a barrel and West Texas Intermediate at $85.08 a barrel. Brent futures separately climbed 0.8% to $91.60 a barrel, the highest since July 30.
Diesel crack spread breaks $100 for the first time
Gains in crude oil came alongside an even sharper move in refined fuel. The U.S. diesel crack spread surged above $100 per barrel, a level it has never reached before, as the Middle East conflict deepens an existing supply crunch.
Supply pressure is not limited to the U.S. The International Energy Agency reported this month that global refinery run rates stood at 80.9 million barrels a day, down 5 million barrels a day on the year. Refiners had already leaned into gasoline and jet fuel output for the summer travel season, leaving diesel production stretched thin.
Iran shifts to a 'fully offensive' stance as ceasefire lapses
Tensions escalated after a senior Iranian official told Reuters that Tehran would move to a fully offensive stance because talks toward a lasting end to the war had stalled. That followed the United States' refusal on Monday to extend a ceasefire agreed in June, which did not last a full month.
Adding to the uncertainty, President Trump threatened to bomb Gulf ally Oman if it finalized a deal with Iran on joint management of the Strait of Hormuz.
Russian export ban deepens the fuel squeeze
Ukrainian drone attacks on Russian refineries have made the diesel shortage worse, as Russia ranks among the top three exporters of fuels. In response to the resulting fuel shortages at home, Russia banned diesel exports until the end of the year.
Sources: Commodities Analysis & Opinion, Business | The Guardian
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