Heating Oil Hovers Near 4-Month High

US heating oil futures traded near $4.30 per gallon, hovering close to a four-month high, as shipping through the Strait of Hormuz slowed while talks between the US and Iran remained at a standstill. No peace deal between the US and Iran appears in sight, as President Trump signaled plans to intensify economic pressure on Iran, while Treasury Secretary Scott Bessent said new sanctions could be announced this week. Meanwhile, more vessels were attacked in the key passageway late last week. Still, Middle Eastern oil producers continue to move substantial volumes of crude through the Persian Gulf despite the incidents. Elsewhere, frequent Ukrainian strikes on Russian oil refineries have disrupted fuel supplies, prompting gasoline rationing in at least two regions and restrictions on refined-product exports. Russia has since extended its existing diesel export ban until January 2027, maintaining restrictions on supplies of the middle distillate used in heating oil.

US heating oil futures traded around $4.23 per gallon, near 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 diplomatic efforts to reopen the Strait of Hormuz, with President Trump saying the US had “total control” over the strategic waterway, while Tehran said it was “under Iran’s control and management,” further clouding the situation. 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. Elsewhere, EIA data showed that distillate stocks, which include diesel and heating oil, were little changed last week.

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.