Oil pulled back after reports of more barrels moving through the Strait of Hormuz and comments from President Trump raising the possibility of an Iran off-ramp. The diesel crack eased from an overnight peak, Saudi exports rebounded from a multi-year low, and Venezuela kept adding barrels even as a contested political transition looms in Caracas.
Oil retreated after reports of more crude moving through the Strait of Hormuz and comments from President Trump raising the possibility of an off-ramp in the Iran conflict, the reversal traders had waited for after weeks of pricing in a war premium.
Diesel crack eases from its overnight peak
The diesel crack, the premium refiners earn turning crude into diesel, hit $110.28 overnight before easing back above $104.00, still historically elevated as refining capacity stays tight and Ukraine continues hitting Russian diesel plants. President Trump told the Financial Times he is worried about diesel supply at home. Over the weekend he pressed President Zelenskyy to stop the refinery strikes, saying they are making the global shortage worse and pushing up U.S. pump prices.
Hormuz traffic hits a six-month high
Admiral Brad Cooper at CENTCOM said oil and LNG shipments through the Strait of Hormuz over the past two weeks reached a six-month high, with mine clearance, naval escorts and Gulf allies moving more than a billion barrels through the strait in recent months. According to CENTCOM: "Momentum is building". Markets still lean on roughly 10 million barrels a day passing through that chokepoint, so every extra tanker matters.
Saudi Arabia added to the rebound. After Houthi forces hit the East-West pipeline and caused trouble at Yanbu, Aramco loaded more from Gulf terminals and used ship-to-ship transfers. Kpler and JPMorgan tracking show Saudi exports back above 4 million barrels a day in September. That recovers from an August slump to about 2.4 million barrels a day, the weakest level in years. Satellite data put Saudi crude moving through Hormuz at around 2.9 million barrels a day over the past six days, up from about 700,000 barrels a day in August, according to Reuters and JPMorgan.
Venezuela adds barrels, but politics loom
Venezuelan exports have also climbed toward multi-year highs, as U.S. licenses, Chevron and traders move more crude to the United States, India and Europe. EIA figures show Venezuela has already shipped well over 100 million barrels to the United States this year. Interim President Delcy Rodríguez is in New York for the U.N. General Assembly, the first Venezuelan head of state to attend the gathering since Maduro in 2018, and is due to meet Trump on Tuesday.
More Venezuelan crude supports supply, but a contested political transition still carries geopolitical risk if street protests and Caracas's security services collide.
Source: Commodities Analysis & Opinion
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