Heating Oil Falls to 3-1/2-Month Low as Supply Fears Ease

Heating oil futures for delivery in the New York Harbor fell to below $3.15 per gallon in late June, hovering near their lowest level since early March, on evidence that oil exports from the Middle East are gradually returning. Satellite data showed that loaded tankers are crossing the Strait of Hormuz as the memorandum of understanding and improved talks between the US and Iran drove both countries to lift their blockade. On top of that, the US remained on track to lift sanction on Iran to unlock fresh sources of energy supply from Western refiners and dollar buyers. Unlike crude oil prices, heating oil futures remained above pre-Iran war levels from late February. Distilling capacity in refiners was hit the hardest from depleted feedstock inventories in Europe and Asia, exemplified by shortages of jet fuel. On top of that, denser crude oil grades from the Persian Gulf, which commonly yield more diesel, were still not at full capacity due to attacks on local refineries.

US heating oil prices fell below $3.20 a gallon, marking their lowest level since early March and a decline of more than 30% from the record high of $4.608 reached on March 20. This downward trend mirrors a sharp retreat in crude prices, driven by increased tanker traffic through the Strait of Hormuz, temporary relief from Iranian sanctions, and the progress of US-Iran peace talks. To contain energy costs, the White House waived the Jones Act and tapped the Strategic Petroleum Reserve. However, the market remains tight because the US operates as a global supplier of last resort, pushing domestic diesel inventories to seasonal lows. Prices are still above the pre-war level of $2.596, and prospective Russian export bans could spark renewed upward pressure. Meanwhile, President Donald Trump ordered a Department of Justice investigation into gasoline prices, which he claims are not falling quickly enough.

US heating oil prices traded around $3.10 per gallon, near the lowest since early March, as progress in US-Iran peace talks fueled expectations of easing energy shortages and weaker fuel price pressures. Markets reacted to reports that Washington and Tehran agreed on a roadmap toward a final agreement within 60 days, while the US Treasury authorized production, delivery, and sale of Iranian oil and petroleum products for two months. A potential reopening of the Strait of Hormuz could mark a major shift for global energy markets, restoring traffic through a route that normally handles about a quarter of global seaborne oil shipments. The prospect of returning supply has already pushed Brent crude below $79 per barrel, its lowest level since early March. US refiners are also adjusting operations after months of disruption, producing record levels of jet fuel while reducing gasoline output to capture stronger margins.