Rabobank says renewed U.S.-Iran tensions, Russia-Ukraine strikes and CPC loading disruptions have lifted crude and refining margins sharply. Brent briefly topped $90, while severe diesel-market tightness is feeding through to export policy and U.S. pump prices.

Geopolitical shocks drive crude repricing

"The escalation between the U.S. and Iran following the collapse of the interim peace deal, as well as intensifying strikes between Ukraine and Russia, drove price rallies across crude oil, refined products, natural gas, and European power markets over the past week."

"Brent crude oil surged from $83/bbl on July 13 to $88/bbl this morning (at the time of writing), briefly topping $90 overnight, the highest level since mid-June, before paring gains. WTI moved from $78 to $82/bbl over the same period, a rise of approximately 5%."

"The rally was driven by Hormuz shipping disruptions, intensified strikes over the weekend, the CPC terminal suspension, and renewed fears of a broader supply crunch as global stockpiles remain at record lows. Diesel markets continue to signal record tightness."

"The ICE gasoil crack spread widened to $65/bbl and hit a record high for three consecutive days last week, while the U.S. 3-2-1 crack spread also reached a record high of $70/bbl. This squeeze reflects a dual supply shock: Ukrainian drone strikes have sharply curtailed Russian diesel exports, while Hormuz disruptions have choked Middle Eastern flows."

"India responded by raising its diesel export levy to 15.5 rupees/liter and its jet fuel export levy to 14.5 rupees/liter, respectively, to retain domestic supply, while U.S. retail gasoline climbed back above $4/gal."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)