Heating Oil Bounces Back

Heating oil futures rose more than 3% to $3.94 per gallon on Thursday, recouping part of the previous session’s sharp losses, as Israeli strikes on Lebanon threatened hopes of sustaining a Middle East ceasefire. Iran blocked shipping in the Strait of Hormuz in protest, though the White House denies the waterway is closed. Iran's Parliament speaker said three key clauses of a 10-point proposal were violated ahead of negotiations scheduled for Friday in Pakistan, adding that in such a situation, a bilateral ceasefire or talks were unreasonable. The near-shutdown of traffic through the Strait, through which about one-fifth of oil flows, has caused the largest oil supply disruption in history. Analysts noted that even once transit resumes, the return of energy supplies won’t be instant

Heating oil futures plummeted around 14% toward $3.80 per gallon on Wednesday as a diplomatic breakthrough between the United States and Iran significantly reduced the geopolitical risk premium. Prices retreated after President Trump delayed military strikes by two weeks in a conditional ceasefire that allowed for the temporary reopening of the Strait of Hormuz. This de-escalation offset a surprisingly bullish EIA report which showed that distillate stocks fell by over 3.1 million barrels, more than double the anticipated draw. At the same time, crude oil inventories rose by 3.08 million barrels against a predicted 0.7 million barrel build, heating oil specific stocks edged up by 233,000 barrels. Market participants also monitored reports of a drone strike on Saudi Arabia’s East West pipeline which serves as a critical alternative route to the Red Sea. Despite this localized disruption the broader plunge in energy benchmarks have eased global supply fears and inflationary pressures.

Heating oil futures tumbled more than 17% to below $3.70 per gallon on Wednesday, hitting a four-week low, after Iran agreed to temporarily reopen the Strait of Hormuz under a two-week ceasefire with the US and Israel. Iranian Foreign Minister Abbas Araghchi said safe transit through the strait would be coordinated with the country’s armed forces, accounting for technical constraints. Earlier, President Donald Trump noted that the ceasefire depends on Iran reopening the waterway, which would allow an agreement to be finalized. Israel has also reportedly agreed to pause strikes while negotiations continue, and the first round of US-Iran talks is set to take place in Islamabad on Friday. The announcement came less than two hours before Trump’s deadline for Iran to reopen the vital waterway or face military strikes targeting its power plants and bridges.