US diesel stocks low as export control threat wanes

: Oil products
26/10/05

The waning threat of a ban on US diesel exports offers little relief for a US distillate complex facing peak heating demand just as domestic inventories slump to historical lows and global supplies tighten.

US president Donald Trump on 30 September tempered his endorsement of a diesel export ban because of concerns that it could push up gasoline prices, as his administration raised expectations of price relief from new diesel supplies in Europe. Trump said he was still "thinking about" an export ban, but believes the US is in a "good place" because of a recent drop in crude prices and a "tremendous" amount of oil coming out of the strait of Hormuz.

US energy secretary Chris Wright expects diesel prices to "move meaningfully down in the coming weeks and days", in part because of additional supplies from Europe. "You will hear announcements from our friends in Europe about new diesel supplies that'll come to the market that'll meaningfully push diesel prices down," Wright says. The G7 announced a 100mn bl oil stocks release on 2 October, to begin immediately.

Market participants are closely watching Trump's evolving comments on the possible ban. Such a measure could help rebuild low domestic distillate inventories and improve supply security during the harvesting season and ahead of winter. But limiting exports could weigh on Nymex ultra-low sulphur diesel (ULSD) futures, reduce arbitrage opportunities and pressure refinery margins, potentially diminishing refiners' incentives to maximise distillate production.

Trump's latest comments come as supply tightens even further in the US northeast ahead of the peak heating season, in part because of refinery maintenance that started in September and will continue until mid-November at Irving Oil's 320,000 b/d St John refinery in New Brunswick, Canada, one of the largest sources of imported diesel for the region. Ultra-low sulphur distillate inventories in the New York region were the lowest in more than four years at 8.9mn bl in the week to 25 September, more than 37pc below a year earlier.

This has boosted demand for deliveries to the region. Gulf coast diesel is moving to the northeast along the Colonial Pipeline as well as arriving by sea, tightening tanker availability, increasing demand for pipeline space and raising transport costs. The arbitrage from the Gulf coast to New York Harbor hit its widest in nearly four years on 29 September, as the Gulf coast ULSD premium to Linden, New Jersey, along the Colonial Pipeline rose to 34.81¢/USG, its highest since November 2022 (see graph).

Cracking spreads

Some support could come from refinery economics that continue to favour diesel over jet fuel. The Nymex ULSD 1:1 crack spread against WTI crude averaged $105.57/bl over 16-30 September after hitting a historical high of $117.92/bl on 16 September. The US jet fuel crack spread averaged $91.07/bl over the same timeframe (see graph). The stronger diesel margin will probably prompt refiners capable of shifting yields towards distillate production to continue prioritising ULSD over jet fuel during the autumn.

Gulf coast diesel prices rose on strong demand and low inventories. ULSD inventories in the region dropped to 35.9mn bl in the week to 25 September, down by 1.4mn bl compared with a year earlier. The region has become a key alternative supplier in the face of lower exports from the Mideast Gulf and Russia. The region's diesel exports surged by 41pc to 1.41mn b/d in September from a year earlier and were the highest for any September since at least 2016, according to oil analytics firm Vortexa.

By Eunice Bridges and Craig Ross

US crack spreads

Colonial Pipeline ULSD arbitrage

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26/10/05

Global inventories 'scarily thin': Aramco CEO

London, 5 October (Argus) — Global oil inventories are "scarily thin" after seven months of production and shipping disruptions caused by the US-Iran war, Saudi state-controlled Aramco's chief executive Amin Nasser said today. "The most serious energy supply shock in my career" has left the global oil supply system straining, Nasser said at the Energy Intelligence Forum in London. "The supply resilience cushion is scarily thin," he said, putting the global oil stock draw at 3bn bl since the start of the war. Replenishing inventories while meeting demand could take up to two years, Nasser said, longer than the 18 months he forecast in early August. He said a co-ordinated release of oil from inventories "was the last major tool in the box". The G7 last week said it would co-ordinate a release of 100mn bl from oil stocks over the next four months, including a substantial diesel release within 20 days. This appears to be part of a 400mn bl commitment made in March. "Emergency reserves might buy us a winter," Nasser said today. "They cannot fix long-term supply." He said a full reopening of the strait of Hormuz is essential to relieve the pressure. But the US and Iran have not reached any sort of agreement that would allow this. Tehran's Islamic Revolutionary Guard Corps (IRGC) has resumed attacks on tankers in the strait of Hormuz and today instructed a tanker transiting the waterway inbound to turn back or be targeted, according to UK Maritime Trade Operations (UKMTO). By Ben Winkley Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

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Hormuz crude flows, ship attacks on the rise

26/10/02

News

26/10/02

Hormuz crude flows, ship attacks on the rise

New York, 2 October (Argus) — Record high tanker freight rates are pushing strait of Hormuz crude flows — and Iranian attacks on tankers — to some of the highest levels since the outbreak of war between Iran and the US. Total Middle East crude oil exports are up by 36pc for the week ending 30 September at 17.92mn b/d, including 12.34mn b/d through the strait of Hormuz, according to vessel information firm TankerTrackers.com. This would place weekly Hormuz crude flows at around 80pc of their levels in February, prior to the joint US-Israeli attacks on Iran, which is estimated by vessel tracking service Vortexa to be around 15.14mn b/d. The US and Iran have not reached any sort of agreement for ending the war, so the risks to ships continue to be as significant as they were earlier in the war when less oil was flowing. But the risks, combined with a limited pool of vessels available to transit Hormuz, has kept freight rates high, incentivizing the dangerous work. The rate for a very large crude carrier (VLCC) to move Middle Eastern crude through Hormuz to Asia-Pacific has been at $34.31/bl since 18 September, its highest level since Argus began assessing the route in November 2016. The spot tanker market is moving from strength-to-strength following the start of the war in Iran, according to Harrys Kosmatos, executive at tanker shipowner TEN, speaking at a forum in New York on Wednesday. He highlighted a deal from earlier in the week for a 2004-built VLCC that a charterer provisionally hired at $2mn per day to transit through the strait of Hormuz. In comparison, a VLCC from the US Gulf coast-China was at $366,704/d on 1 October, per Argus assessments. "You don't even need peace now in Iran, you just need the oil to come out," Robert Bugbee, president of shipowner Scorpio Tankers said. Iran steps up attacks The increased ship traffic has been accompanied by more attacks from Iran, particularly on ships transiting the strait on the southern US-assisted transit route. There were six attacks in the last five days, per the UK Maritime Trade Operations Centre (UKMTO). This includes an attack reported Friday against a tanker exiting the strait which caused a fire onboard. The vessel remains in transit. Iran continues to target crude exports from countries in the Gulf, including the UAE and Kuwait. "Several oil tankers have been hit in the strait of Hormuz in recent days, three of the latest of which are owned or leased by entities in the UAE," according to a statement by the Persian Gulf Strait Authority published by Iranian-government affiliated news agency IRNA on Friday. The Kuwaiti VLCC Kazimah III was hit on 1 October, according to Martin Kelly, former head of advisory at EOS Risk Group, the second Kuwaiti state VLCC hit since 28 September. Since the start of July, 31 of 48 projectile strike incidents reported to UKMTO occurred on the southern US-assisted transit lane. UKMTO acknowledged in its weekly report that there are likely "other projectile strikes occurring that have NOT been reported to UKMTO." By Charlotte Bawol Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

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Air, sea sustainable fuel tipping points still far off

26/10/02

News

26/10/02

Air, sea sustainable fuel tipping points still far off

Strong global policy is needed to change sustainable shipping fuel economics, writes Michael Ball Washington, 2 October (Argus) — Significant work remains to transition the world away from fossil fuel in aviation and shipping, despite repeated support pledged at UN climate talks. The need to ramp up the use of alternative fuels will be a focus of the UN's Cop 31 climate summit next month in Antalya, Turkey. The host wants countries to join a new pledge to boost electricity to 35pc of all global final energy consumption by 2035, up from about 20pc currently. Last year's host, Brazil, has its own initiative to quadruple global output and use of sustainable fuels, including biofuels, by 2035. And past Cops have produced other pledges to reduce emissions in aviation or shipping. But alternative fuels have not yet reached their tipping point, accounting for less than 1pc of the fuel used in aviation or shipping globally. Cost and politics remain two of the major roadblocks. The sustainable aviation fuel (SAF) industry has shown signs of growth. Major fuel users, including Delta Airlines and FedEx, have recently extended and expanded SAF offtake agreements . And production is on the rise. For example, Neste, the leading producer of SAF, currently has production capacity of 1.5mn t/yr, which it plans to grow to 2.2mn t/yr in 2027, or about 750mn USG. But SAF still makes up a small, but growing, sliver of fuel use. Suppliers in the EU blended nearly 3pc into jet fuel last year , surpassing the bloc's 2pc mandate in its first year. In the US, SAF accounts for roughly 1pc of jet fuel supply, although the US EIA expects that to soon reach about 2pc. Global production this year is set to exceed 790mn USG, up by 26pc on the year, according to the International Air Transport Association. The story is similar in shipping. Globally, ships of at least 5,000 gross tonnage used more than 223mn t of fuel oil in 2024, about 92.5pc of which came from heavy fuel oil, light fuel oil or diesel, according to International Maritime Organization (IMO) data. Only about 0.8pc came from "other" fuels, despite biofuels jumping to more than 1.2mn t from less than 400,000t in 2023. But the slow pace of fleet turnover, and the need for more engines that can use alternatives, means that the course the industry plots over the next few years could determine whether it can meet the IMO's goal of net zero emissions by 2050, according to a recent report from the Global Centre for Maritime Decarbonisation (GCMD). Cost calculations Cost remains a major hurdle to greater SAF use in aviation and shipping. SAF can reduce emissions under the International Civil Aviation Organisation's Carbon Offsetting and Reduction Scheme for International Aviation (Corsia) system, which seeks to offset any growth in aviation CO2 above 85pc of 2019 levels. But using Corsia carbon offsets currently costs significantly less. Argus assessed Corsia phase 1 credits at $12.45/t this week, compared with an abatement cost as high as $310/t for the US west coast. In other parts of the world , the cost of abating 1t of CO2 equivalent in emissions by using SAF instead of jet fuel is even higher. In shipping, GCMD says strong global policy is needed to change the economics of sustainable fuels, as national and sub-national efforts will fall short. At the top of the list is the IMO-proposed carbon pricing system, the adoption of which was delayed last year in the face of US opposition. IMO pledged to try again this year. The agency will meet next month to consider next steps toward achieving its greenhouse gas emissions goals. "Achieving a price signal of this magnitude will be challenging, but without it, the economics are unlikely to support the transition to new fuels at scale," the GCMD said. Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

News

G7 starts immediate 100mn bl oil stock release

26/10/02

News

26/10/02

G7 starts immediate 100mn bl oil stock release

The move comes in response to tightening diesel markets and a rapid run-up in prices, particularly in the US, writes James Keates London, 2 October (Argus) — The G7 will immediately begin a four-month release of 100mn bl of oil stocks, with a substantial diesel release within 20 days, it said on 2 October. The group asked the IEA to monitor the "immediate and full implementation" of stock release commitments made in March. This indicates that the 100mn bl is a portion of these commitments, rather than an extra pledge. The move comes in response to increasing concerns about European diesel supply and pressure on US president Donald Trump to restrict or even ban exports of the diesel on which Europe has become reliant. European diesel prices dropped sharply relative to prices in Asia-Pacific in response to the prospect of a "front-loaded" oil inventory release by G7 members (see graph). The G7 statement does not specify the amount of diesel or how the 100mn bl will be divided between crude and products. Europe has become increasingly dependent on US diesel since Mideast Gulf flows were constrained by the near closure of the strait of Hormuz and after Russia halted diesel exports. The EU, the UK and Norway received 430,000 b/d of US diesel and other gasoil in August, according to Kpler. US supplies have accounted for around 40pc of the region's diesel and gasoil imports on average this year. Any US export ban would intensify competition between Europe, Latin America and other importing regions for alternative supplies. A number of market participants have questioned whether a full US ban would be sustainable. Excess diesel would accumulate in the US, potentially forcing refiners to cut crude runs and reducing domestic gasoline production. The G7 statement also addresses the possibility of a US diesel export ban. Members pledged not to restrict trade in energy and energy products between G7 countries and called on other producers to avoid bans that could exacerbate market tensions. Such a ban would undermine its trust in the US as a reliable partner, the European Commission said on 2 October. G7 members will meet through the IEA in the coming days to discuss additional diesel releases if needed. They will also co-ordinate refinery maintenance schedules to avoid simultaneous shutdowns and temporarily raise refinery utilisation where possible, and will encourage countries with significant refining capacity to increase production of refined products, particularly diesel. IEA members agreed in March to make 400mn bl of oil available from their emergency reserves in response to the supply disruptions stemming from the war in the Middle East. The IEA subsequently put members' planned contributions at 426mn bl, comprising just over 300mn bl of crude and 125mn bl of products. Europe appears to have released very little of this during the initial Hormuz shock of March-June, IEA data show (see graph). OECD Asia — South Korea and Japan — released an initial 72mn bl of crude in April but even their stocks had begun to build again by June. Monitor wizard EU diesel supplies are stable for now, although prices are high because of tight global markets, the commission said. The IEA will monitor the effect of the stocks release and other supply measures on energy security and market stability and report within 20 days. Its report will include recommendations on further action, including replenishing emergency stocks, the G7 said. The G7 also addressed the wider conflicts behind the disruption to energy markets. It condemned Iran's attacks on neighbouring countries, called for the immediate restoration of navigational rights through the strait of Hormuz and pledged to maintain sanctions against Russia. Diesel east-west spread OECD oil inventories OECD Europe monthly stock change Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

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BMUKN erwägt Ausschluss maritimer THG-Mengen

26/10/02

News

26/10/02

BMUKN erwägt Ausschluss maritimer THG-Mengen

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