Shipping Lanes & Supply Strains

Futures markets surged higher yesterday on both a breakdown of Ukrainian-Russian talks along with naval “exercises” by Russian and Iranian fleets next to the Straits of Hormuz. A long talked about chokepoint in shipping and oil movements, any stress in that region will trigger panic buying. Good news is that east coast cash prices for products did not move has high as futures, which is reflected in your pricing. Still Diesel futures sit roughly $.50 higher than early JAN, touching the very top end of the range. Warmer temps into the Northeast are also helping to ease physical pricing as product movement and usage gets back to a normal pace.

Unfortunately, we seemed more destined to have some type of Iranian conflict as the days go by. Moving more vessels into the region along with the President publicly announcing his displeasure with the UK for talking about releasing control of Diego Garcia. Diego what? Yes, it is a tiny dot in the middle of the Indian Ocean that would be integral for air support into the Middle East. Venezuelan crude and products are showing some signs of life as we must now figure out how to get those proceeds back into the country and infrastructure along with convincing some majors to join in the rebuild effort. So far, just Chevron seems willing. Like most spikes, it will take some time to shed the gains seen in the last few weeks, lets hope we see it before we see the tulips.