Heating Oil Rises to 7-Week High

Heating oil in the US climbed toward $3.90 per gallon, the highest since late May, as concerns over fuel supplies increased. President Donald Trump said the US would reinstate a naval blockade on Iran and impose a 20% reimbursement fee on cargo passing through the Strait of Hormuz, raising fears over disruptions to regional energy flows. Supply concerns were also heightened by disruptions to Russian energy exports, with Ukraine reporting strikes on an oil depot in Stavropol and storage facilities at the port of Kavkaz. Russia said it would suspend diesel exports and become a net importer as repeated Ukrainian attacks and higher crude prices disrupted operations at key refineries. Meanwhile, Kazakhstan’s Caspian Pipeline Consortium reduced shipments by 7% in June due to maintenance at the Tengiz oilfield and lower Russian flows. At the same time, warmer-than-normal weather forecasts through July 28 are also expected to keep power sector fuel demand elevated.

US heating oil futures rose about 3% toward $3.70 per gallon on Monday, recouping losses from recent sessions as escalating hostilities between the US and Iran heightened concerns over fuel supplies. The US launched another wave of strikes on Iran on Sunday after hitting 140 targets a day earlier in response to an IRGC attack on a container ship in the Strait of Hormuz. Iran retaliated by targeting US military facilities across Jordan, Kuwait, Bahrain, and Oman. While Tehran claimed it had closed the Strait of Hormuz until further notice, US Central Command maintained that the strategic waterway remained open to lawful shipping. The latest flare-up further dimmed hopes for diplomacy after reports last week indicated technical talks were underway. Meanwhile, Russia said it would suspend diesel exports and become a net importer as repeated Ukrainian attacks and higher crude prices disrupted operations at key refineries, adding to supply concerns.

US heating oil futures fell to around $3.50 per gallon after recently surging more than 10% to the highest level in over a month, as traders judged the latest US strikes on Iran were unlikely to trigger a broader conflict. While security conditions in the Strait of Hormuz have worsened and tanker traffic has slowed, markets are not pricing in a full closure of the vital shipping route. Investors instead expect energy flows through the Persian Gulf to continue, as technical talks between the US and Iran continue and Washington remains committed to finding a solution. Elsewhere, Russia, a major diesel producer, announced it would suspend exports and become a net importer after higher crude prices and repeated Ukrainian attacks disrupted operations at key refineries. Heating oil prices remain well above pre-conflict levels despite retreating from the record high reached in late March, reflecting persistent concerns over global fuel supplies and refinery output.