Diesel Futures Hit Record Volatility Amid Iranian Conflict

It is amazing that with over 25 years in this industry you can still see something new. Monday brought the most volatile day on record for diesel futures. The trading range from low to high was over $1.20…. in one day! Tuesday and Wednesday saw ranges of over $.50! As we stand right now, pricing is roughly $1.50 higher since the Iranian conflict started. Again, the US doesn’t have a supply problem, but because oil commodities are a world basket of pricing, the shipping bottleneck around the Straits of Hormuz is causing the increases. Releasing oil reserves, while largely symbolic, will take 3 to 4 weeks to hit markets. The only cure is to get vessels moving again. The Saudis are at max capacity of their Petroline, an east-west pipeline to the red sea, unfortunately it brings back into play the Houthis attacks around the Yemen coast.

While I hope this volatility is not the new normal, it is now clear that this will not be just a two week event. Solidifying safe passage for tankers will take a week or so, once that starts, you should start to see some relief in pricing. While fuel pricing is vital to all of us, Suppliers that handle volatility the best don’t panic. Because they have reliable supply, best in class delivery service, and a dedicated team working around the clock for their customers.