Heating Oil Approaches 4-Month High

US heating oil futures advanced toward $4.30 per gallon on Wednesday, approaching a four-month high amid mounting concerns over tight distillate supplies. Yemen’s Houthis recently attacked Saudi Arabia’s Jazan refinery, which has been shut since July 27 following an earlier strike by the group. Plans to restart the facility have since been postponed from August 15 to August 30. Russia’s fuel export restrictions have also added to global supply concerns. This comes on top of uncertainty over the Strait of Hormuz, where markets are assessing the prospects for a potential US-Iran agreement on the key waterway. Pakistan’s defense minister said Washington and Tehran were “close to some sort of arrangement,” while a Qatari official cited by Al Jazeera said Iran-Oman talks had reached an advanced stage. Meanwhile, US refiners are processing crude at the highest seasonal pace since 2018, despite capacity falling by 600,000 barrels per day over the same period.

US heating oil prices extended their rally near $4.30 per gallon, moving back toward a four-month high as prospects for a deal to reopen the Strait of Hormuz dimmed. President Donald Trump made demands on Iran, further dimming hopes for an agreement to reopen the waterway. This followed Iran’s statement that a deal with Oman on new shipping routes was close to being finalized, while warning that reopening the waterway remained conditional on Washington meeting additional demands. Meanwhile, an attack claimed by Iran-backed Houthi militants on Saudi Arabia’s Jazan refinery in the Red Sea compounded supply concerns. Saudi authorities said the fire was extinguished early Sunday but gave no further details. Russia’s fuel export restrictions have also added to supply concerns. Refinery capacity remains strained as demand outpaces supply, with US refiners processing crude at the highest seasonal pace since 2018 despite capacity having fallen by 600,000 barrels per day over the same period.

US heating oil prices surged more than 7% to around $4.19 per gallon after Iran-backed Houthi militants claimed an attack on Saudi Arabia’s Jazan refinery near the Red Sea. Saudi authorities said the resulting fire was extinguished early Sunday, without providing further details. The incident added to pressure on an already tight global diesel market, as disruptions to shipping through the Strait of Hormuz compounded the impact of Russia’s fuel export restrictions. Refinery capacity is also under strain as fuel demand continues to outpace supply, with US refiners processing crude at the highest seasonal rate since 2018 despite capacity having fallen by nearly 600,000 barrels per day over the same period. Meanwhile, Iran and Oman have yet to finalize a deal to reopen Hormuz. Iran said the agreement was “very close,” but insisted that the US must lift its blockade and provide compensation before reopening the waterway.