Heating Oil Extends Retreat

US heating oil futures extended their retreat to around $4.15 per gallon, hitting a two-week low, following reports that Iran and Oman discussed an interim framework aimed at restoring shipping through the Strait of Hormuz. The proposal includes a temporary maritime corridor to facilitate vessel traffic through the key oil chokepoint. Further negotiations are expected to cover permanent transit routes, traffic management, information sharing and maritime security arrangements. At the same time, Washington’s latest steps to pressure Iran were milder than expected, as the US held off on secondary sanctions against its trading partners. Nevertheless, elevated diesel refining margins and low US distillate inventories highlighted persistent tightness in refined-product markets, with stocks around 12–13% below the five-year average ahead of fall maintenance and the winter heating season.

US heating oil futures traded around $4.28 per gallon, holding most of their losses from the previous session, as markets assessed intensified US economic pressure on Iran aimed at reopening the Strait of Hormuz. The Trump administration announced plans to impose secondary sanctions on entities facilitating Iran’s economy as part of a new campaign dubbed “Operation Economic Outcast.” Treasury Secretary Scott Bessent said the US was targeting Iran’s financial connections globally and urging other countries to cease economic ties with Tehran. Still, markets remain uncertain whether the measures will ease Iran’s grip on the key waterway or instead prolong disruptions. Meanwhile, elevated diesel refining margins and low US distillate inventories highlighted persistent tightness in refined-product markets, with stocks around 12–13% below the five-year average ahead of the fall maintenance and winter heating season.

US heating oil futures fell to around $4.30 per gallon, retreating from their highest level since early April, tracking a decline in benchmark crude prices as markets await Washington’s announcement of new sanctions on Iran. Treasury Secretary Scott Bessent is set to outline the measures at a press conference, warning that the US could impose what he described as the “toughest sanctions in history.” President Donald Trump has also threatened penalties on countries that continue trading with Tehran. The US efforts to isolate Iran could increase the risk of retaliation and deeper disruptions to global energy markets. Meanwhile, tighter Canadian crude supplies could put upward pressure on refined product prices by constraining refinery feedstock, particularly in the US Midwest, where refiners rely on Canada for around 70% of their crude. Fuel supply concerns have also intensified after Ukrainian strikes on Russian refineries disrupted production and led to shortages in several regions.