Hormuz traffic falls to single digits as Saudi Arabia shuts its East-West pipeline

Crude supply out of the Persian Gulf tightened over the weekend, and that is the number that should worry anyone buying at the rack. Only 14 commodity vessels crossed the Strait of Hormuz in either direction, single digits a day against a 10-day average of 14. Saudi Arabia also shut the East-West pipeline it uses to move crude from the Red Sea around Hormuz, closing the one workaround when the strait gets thin.

Fewer barrels reaching the water means firmer crude benchmarks, and wholesale acquisition cost tracks crude with a short lag. If the slowdown holds through the week, jobbers could see rack differentials widen and branded contract pricing follow crude up before spot supply catches its breath. Product isn't short yet. The risk is the cost side, not the physical barrel at your terminal.

The ethanol blend

For the first time ever, gasoline American drivers burned in May averaged more than 11% ethanol. That is a real shift in what comes across the rack, and it lands as E15 keeps gaining ground. IRFA says E15 is on track to become Iowa's top-selling fuel in 2026, and a California E15 implementation bill passed unanimously out of the state legislature, which opens the largest gasoline market in the country to the higher blend.

For marketers, more E15 volume changes blend economics and RIN math at the terminal, and it gives unbranded suppliers another octane lever. US fuel ethanol production slipped 1%, so supply is not racing ahead of the demand story. One more sign of where the money is moving: a 35 MMgy ethanol plant with 3.7 million bushels of grain storage, rail transload, and a corporate headquarters is headed to sealed-bid auction through Maas Companies.

Chevron's LNG push

Chevron is pushing LNG expansion in Argentina and Australia, with more planned in Africa and the Mediterranean, President of Global Gas Freeman Shaheen told Reuters. Buyers want diversified supply after the Middle East conflict trapped cargoes out of Qatar and the UAE. Chevron Australia's Balaji Krishnamurthy told Bloomberg he has a hard time seeing prices come down in the next six months. This is a gas-market story more than a gasoline one, so it matters to a jobber mainly as a read on how long Gulf energy supply stays disrupted.

What to watch

Watch Hormuz vessel counts through the week and whether Saudi Arabia restarts the East-West line. Both feed straight into crude and your rack cost. On the blend side, watch how fast California moves from a passed bill to actual E15 at the pump, and whether the November RIN market reacts to the 11% number.