Brent stays above $100 on Middle East risk as heating oil falls 3-4%

Brent closed at $104.62 a barrel, down 1.9% on the day and still well above the roughly $72 it traded in late February before the Iran war. That sets the floor under crude. It is unlikely to come down while Houthi attacks keep threatening Saudi oil infrastructure and Gulf shipping, and jobbers buying against the rack are wearing that risk premium right now.

The Russia diesel deal

The Trump administration's Russia diesel deal has not done much to US fuel prices. Heating oil futures fell 3-4%, and neither diesel nor heating oil has pushed past where it already was. The deal was supposed to loosen diesel supply and ease the pain downstream. So far it hasn't shown up at the rack.

For the White House this is turning into a political problem ahead of the midterms. For the rest of us it means the supply relief we were told to expect may be slower and thinner than billed, so don't count on near-term supply relief when planning diesel buys.

Saudi Petroline

Saudi Arabia plans to raise its East-West onshore pipeline to 10 million bpd within two to three years, Energy Minister Prince Abdulaziz bin Salman said at the WPC Energy Congress in Riyadh. The 740-mile Petroline currently moves about 5.8 million bpd against a 7 million ceiling. It bypasses the Strait of Hormuz entirely, and it only came back after a two-week suspension following the September drone attacks.

Once that capacity is in place, more barrels could reach the Red Sea without transiting Hormuz, which would cap the worst-case on crude. That matters to a US buyer because the tail risk in Brent is exactly what's padding your cost today.

Japanese tankers

Japanese refiners are picking up Middle East crude through ship-to-ship transfers in the Gulf of Oman, off Oman or Fujairah, rather than sailing into the Persian Gulf through Hormuz, Bloomberg reported. Tankers that steered clear since the Iran war started are coming back, but only to the safe side of the strait.

That rerouting adds freight and insurance cost to every Gulf barrel, and global crude prices carry it.

Russian refinery strikes

Ukraine doesn't need US intelligence to keep hitting Russian refineries, a former US ambassador said. More strikes mean less Russian diesel on the water, which could keep global product tight even if the Russia deal eventually delivers.

What to watch

Hormuz staying open and the Houthi threat holding Brent near $105 is the first question. The second is whether Washington, squeezed on fuel prices before the midterms, reaches for something beyond the Russia deal to move diesel at the rack.