Heating Oil Prices Fall

US heating oil futures fell below $3.60 per gallon, after erasing gains in the previous session, as Israel and Iran agreed to halt mutual attacks following a recent escalation in violence. Israeli Prime Minister Benjamin Netanyahu said Israel is pausing strikes on Iran for now but will retaliate if Tehran attacks again, while Iranian media echoed a similar stance. The development kept hopes alive for efforts to renew the ceasefire into a broader agreement in the Middle East. While a fragile truce remains in effect, the Strait of Hormuz remains constrained under a two-sided blockade by Tehran and Washington, significantly limiting exports of distillate products from the region. Meanwhile, US distillate inventories, including diesel and heating oil, rose by 1.502 million barrels in the final week of May.

US heating oil futures climbed above $3.70 per gallon, recovering from a two-day decline after reports showed that Iran and Israel exchanged fire, putting US efforts to secure a new interim ceasefire with Tehran at risk. Iran launched a fresh wave of attacks on Israel hours after firing ballistic missiles over the weekend. Israel retaliated with strikes on military targets in western and central Iran, while explosions were reported in Tehran. This comes even as President Donald Trump urged both sides to stop fighting and give diplomacy a chance. The latest developments raise the risk of further military escalation, which could deepen disruptions to Middle Eastern shipping routes and energy exports, intensifying tightness in global distillate markets. Meanwhile, US distillate inventories, including diesel and heating oil, increased by 1.502 million barrels in the final week of May.

US heating oil futures fell to around $3.60 per gallon in early June, extending losses from the previous session, as markets weighed the chances of a viable diplomatic resolution in the Middle East. President Trump said ceasefire talks were in the “final” stages and was reportedly reluctant to escalate into a full-scale war with Iran despite recent clashes. This was contrasted by Iran’s foreign minister, who earlier said negotiations had stalled. Adding to the uncertainty, Iran-backed Hezbollah also rejected a US-brokered ceasefire proposal in Lebanon. These developments led to continued constraints on tanker traffic in the Strait of Hormuz, which accounts for about one-fifth of global oil consumption and has remained largely shut since March. Meanwhile, distillate inventories, including diesel and heating oil, increased by 1.502 million barrels in the final week of May.