Key facts
- Crude oil prices rose amid heightened U.S.-Iran tensions and failed peace negotiations.
- Brent crude traded at $91.33 per barrel and WTI at $85.08 per barrel.
- U.S. diesel crack spreads hit a record high, exceeding $100 per barrel.
- Global refinery output has declined compared to the previous year.
- Ukrainian drone attacks on Russian refineries and subsequent Russian export bans contributed to the diesel crunch.
Escalating tensions between the U.S. and Iran, coupled with the failure of peace negotiations, have driven crude oil prices higher. Brent crude was trading at $91.33 per barrel and West Texas Intermediate at $85.08 per barrel as Iran signaled a shift to an "fully offensive" strategy. This geopolitical uncertainty is compounded by President Trump's threat to bomb Oman if it finalized a deal with Iran regarding the Strait of Hormuz.
Concurrently, the diesel crack spread in U.S. refineries has surged above $100 per barrel, marking a historic high and underscoring a severe supply shortage for the fuel. This global crunch is partly due to refiners prioritizing gasoline and jet fuel production during the summer travel season. Further exacerbating the situation, Ukrainian drone attacks on Russian refineries have led to fuel shortages, prompting Russia to ban diesel exports until the end of the year. The International Energy Agency reported that global refinery run rates have fallen by 5 million barrels daily compared to the previous year.