Energy Market Updates

 Most by now get that since this conflict began it has created logistics and finished products problem, not a crude supply problem. Not sitting idly by, Saudi Arabia...

 A fair amount of news is being reported on how much refiners are making on finished diesel, upwards of $100 per barrel. Recall three weeks ago we mentioned this and...

 Fresh highs reached again this week as a peace deal and strait opening remain elusive. It appears now that US once again have been negotiating with a group who has no decision making authority whatsoever. As a 20 year Sales veteran, I feel their pain.

 It was just 10 days ago we were feeling pretty good to seeing sub $3 diesel pricing. This morning I feel like Kevin Bacon’s character in the final scene of Animal House...

 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...

Apparently the Strait of Hormuz is operating on Bankers hours this week. After a promising $.45 drop on Friday, the reaction to the news has now seen futures take back all of the loss and then some.

 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.

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!

As we wind down the third week of this armed conflict with Iran, fuel markets continue to soar higher, now roughly $2.00 per gallon higher on distillates. Recent increases come on the fear of the conflict spreading to other nations, and the stalled reopening of the Strait of Hormuz.

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.