Brent near $110 as DOE pushes refiners for more diesel and N.J. refinery workers get locked out
Brent crude rose 0.9% to $110.59 on Oct. 20, near its highest level since the war with Iran began in late February. There's no clear end in sight to that war, which means the elevated crude cost feeding your rack price may not ease soon. For jobbers and haulers, that's weeks of high wholesale running straight into winter demand.
Diesel push
A US energy department official said the agency is working with refiners to produce more diesel, Reuters reported. That matters because the distillate crack is what sets your delivered cost this time of year, and supply is tight. More diesel yield out of US refineries could soften the premium haulers are paying, if the barrels actually show up.
N.J. lockout
Union employees at New Jersey oil refineries were locked out after their contracts expired, CBS News reported. A lockout cuts into East Coast refining runs right as heating demand builds. Less local product out of PADD 1 could widen the regional gap and push Northeast rack prices up if the standoff drags.
The tanker switch
The Trump administration is authorizing the sale of sanctioned oil tankers so the ships can carry non-sanctioned crude, Energy Secretary Chris Wright said Oct. 19 at a Citadel Securities event. "We're going to move some of the ships from what I call the bad-guy fleet to the good-guy fleet," Wright said. Freeing idled tonnage could ease some of the record freight costs that have forced Asian buyers onto smaller tankers, and looser shipping eventually filters back into the crude price US refiners pay.
Saudi risk
Houthi strikes on Saudi oil infrastructure are threatening production, with Brent at $108 in OilPrice's read and the Brent-WTI spread out to $5. A wider spread helps US refiners buying WTI-linked barrels, since it cheapens their feedstock against the global benchmark. Saudi and Asian refiners are also fighting over 2027 term deals, with the Iran war having pushed Middle East exporters into heavy spot sales this year. None of that hits your invoice next week, but it's why the crude floor stays high.
What to watch
Whether the N.J. lockout pulls East Coast refining runs down into heating season. Whether DOE's diesel effort produces real barrels or just a press line. And whether the tanker reshuffle actually loosens freight, which could ease crude by a few dollars if the Strait of Hormuz stays open.