Heating Oil Tumbles 17%

US heating oil prices fell toward $4.00 per gallon on Monday, pulling back from a more than three-month high as reports of a pause in hostilities between Iran and the US provided some relief from supply concerns. Washington has paused its bombing campaign since late Friday after nearly two weeks of strikes. A senior Iranian official said Tehran would halt attacks if the US also refrains from striking, adding that the message had already been conveyed to Washington. The pause coincided with Omani-mediated talks in Tehran on a provisional arrangement to manage shipping through the Strait of Hormuz, a move that could reduce disruptions to oil flows. Beyond the Middle East, Russian fuel supplies remained constrained, with fewer than half of the refineries damaged by Ukrainian drone strikes back in operation, leaving around 45 million tonnes of annual refining capacity offline. Forecasts of warmer-than-normal weather through August 7 could also support power-sector demand.

US heating oil prices fell 2.7% to around $4.23 per gallon, retreating from a 3-1/2-month high of $4.34 reached in the previous session, as broader oil markets declined on signs of renewed diplomatic efforts between the US and Iran. Reports indicated that Pakistan, with backing from China, was seeking to restart negotiations, raising hopes of a potential easing in regional tensions. However, the Middle East conflict intensified this week, with US Central Command conducting its 13th consecutive night of strikes on Iran. Outside the region, Russian fuel supplies remain constrained, with less than half of refinery capacity damaged by Ukrainian drone attacks restored, leaving around 45 million tonnes of annual capacity offline. Meanwhile, warmer-than-normal weather forecasts through August 7 could lift power sector demand. EIA data showed distillate inventories, including heating oil and diesel, increased by 1.395 million barrels in the week ended July 17.

US heating oil prices held above $4.30 per gallon, near their highest level since early April, as the escalating US-Iran conflict spilled into other key shipping routes, heightening concerns over deeper disruptions to energy supplies. With US strikes on Iran approaching a second week, tensions spread to the Red Sea after President Donald Trump warned Tehran it would be held accountable for any further attacks, following claims by Iran-backed Houthi rebels that they had struck two Saudi oil tankers. The growing security risks have prompted more tankers to avoid the Bab el-Mandeb Strait, threatening further disruptions to a vital global shipping route. Further supporting distillate prices, less than half of the Russian refining capacity damaged by Ukrainian drone attacks has been restored, leaving about 45 million tonnes per year of capacity offline. Even so, fuel supplies in Russia have shown signs of improving after Ukraine shifted its attacks from major refineries to maritime targets.