Diesel holds near its recent highs as Persian Gulf supply scares keep crude bid
Diesel is staying expensive at the rack, and the reason is sitting half a world away in the Persian Gulf. Supply fears out of the Strait of Hormuz are keeping crude bid, and that cost is flowing straight through to the diesel your trucks pull this week. For jobbers, that means wholesale cost isn't easing the way a normal October would hand you.
Persian Gulf tankers
Iran's Revolutionary Guard Navy claimed Thursday that seven vessels were hit in the Persian Gulf over the past day, four of them oil tankers its forces say they struck during transfers in the north, and three others that hit mines west of the strait. Oil prices moved up on the news.
Whether every claim holds up or not, the market is pricing the risk, and that is what lands on your invoice. When tankers are getting hit and mines are in the water near Hormuz, the crude barrels you depend on carry a war premium. That premium doesn't care whether you run branded or unbranded. It shows up at the terminal either way, and allocation tightens fast when supply gets jumpy.
Qatar locks up Cheniere
QatarEnergy signed a deal with Cheniere Energy to buy 4 million tons a year of LNG through 2054, its first US offtake deal, after its own Ras Laffan facility was damaged in the war and Hormuz traffic cut its flows. Qatar is buying US gas to cover customers it can no longer supply.
This is LNG, not your rack product, so don't lose sleep over it directly. It matters because US export volume is getting committed out to 2054, and a Gulf exporter that big leaning on American molecules tells you how disrupted the global energy picture is right now. The same disruption is part of what's keeping your diesel expensive.
India's Gulf barrels
India pulled 2.8 million barrels a day from the Middle East in September, 54% of its imports for the month, while Chinese competition for Russian barrels cut India's Russian intake.
The read for a US operator: Gulf barrels are moving again, which is the demand side eating up the supply that just got spooked by the tanker strikes. More buyers chasing barrels that may not be there keeps the floor under crude, and under your diesel cost.
What to watch
Whether the strait stays passable is the whole question. If Hormuz traffic holds and the tanker strikes don't repeat, crude could ease and diesel at the rack may soften into November. If more vessels get hit, expect the war premium to stick and allocation to stay tight on branded supply.