Energy Market Updates

 It’s turned into a sit and wait game for much of the fuel markets the last week. Waiting for direct negotiations between the US and Iran on a formal peace deal. The US...

 As the ebb and flow of ship traffic in the Middle East returns to pre conflict levels, traders have cut roughly half the increase in futures pricing. Shipping rates...

 Deal signed, now what. Actually it’s a “memorandum of understanding”. Can you imagine the password on that Docusign email! A lot still has to fall into place before we...

You would think that a $.60 price drop in the last week would have us excited, but this is now roughly the fourth time we have retreated from a record high on peace news. Although what is interesting is that this most recent drop has come over 5 sessions, over a holiday week, and not a massive drop off a soundbite. To add, it doesn’t appear that any concrete plans have emerged and fighting within the Iranian delegation may prolong any lasting truce. On the bright side, ship traffic through the Strait is roughly 43% of normal, seeing about 25 vessel pass in the last 24 hours. My aluminum hat wearing side thinks this is likely what the US wants. Let Iran self-destruct and quietly return to normal. This coming from a guy who still can’t figure out how to hang up a call on an iPhone.

 Last week we were optimistic that markets would turn south with news that Iran and the US would be meeting over the weekend to hammer out a resolution. That all turned Saturday morning with a tweet that the meeting was off. The past week has shown little in way of the conflict ending anytime soon. A senior meeting at the White House indicated that we could be in for “months” long standoff, and the President stating that he would like the Russian-Ukraine conflict to end at the same time.

 Who said you cant triple stamp a double stamp? In an effort to restart ship traffic through the Strait of Hormuz, the US has begun a blockade of any ships going to or out of Iranian ports. Also attempting to secure passage for all other vessels. Effectively showing Iran they won't be able to fire upon vessels moving through the tight passage. Depending upon which news outlet you listen to, it appears to be working. Those countries who depend on Iranian product like China and India, are now forced into the discussions on some type of resolution.

Yesterday illustrates perfectly how reactive fuel markets are to world stress. You can look at ULSD futures as the blood pressure reading the financial world. Right now its reading 180 over 120….

I have said to many in the last week that even though pricing remained elevated, we appeared to be moving in the right direction. For thirty days the markets have been...

It has been hard to find any good news in the fuel industry lately. Add to that a Texas refinery fire that put offline a 2m gallon per day diesel unit on Tuesday which halted the market sell off seen the day before. The Market is now tasked with trying to identify how much of the 15 point plan to peace is attainable, valid, or even received by Iran. It is largely held that there may be several factions seeking control in Iran, making it difficult to achieve any type of agreements. As some ships start to trickle through the Strait of Hormuz, it still may be a while until we see any type of normalized traffic, as I am guessing it will turn into a fee based passage system. They should put some of those gantry systems like on the Mass Pike!

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.