Heating Oil Plunges on Export Ban Reports

US heating oil futures sank below $4.80 per gallon after reports that the Trump administration could impose a 90-day ban on diesel exports. The proposal faces divisions within the administration and the oil industry as market fundamentals clash against high diesel prices ahead of mid-term elections. The US exports around 20% of global diesel, flooding the domestic market with fuel in the short term should the ban pass. Still, should stocks of distillate fuel be refilled, the ban would cut refining capacity at a time that crack spreads continue to extend record highs. Distillate fuel prices had surged to record highs this month as low crude oil supplies from the Middle East and strikes on Russian refineries dampened global availability of fuel. The potential for an export ban from the US were combined with President Trump attempting to orchestrate an energy infrastructure ceasefire between Russia and Ukraine.

US heating oil prices fell to around $4.80 per gallon, retreating further from last week’s record high above $5.20, after reports that the Trump administration is preparing a plan to ban diesel exports for 90 days. The proposal faces divisions within the administration and the oil industry as Washington seeks to bring down energy prices. Meanwhile, Ukrainian President Volodymyr Zelenskyy called on President Trump to organize a trilateral meeting with Russian President Vladimir Putin, saying the leaders need to move “as quickly as possible” to end the war. Zelenskyy also said he and Trump discussed an energy ceasefire. Trump said Moscow has “unfortunately lost control” of its diesel industry due to the war and has previously urged Zelenskyy to stop targeting Russian oil refineries with drone strikes. Meanwhile, Saudi Arabia’s partial restoration of its East-West pipeline is helping ease some supply concerns despite uncertainty over Middle East peace prospects.

US heating oil prices fell below $4.90 per gallon, the lowest level in two weeks, as recovering Middle East oil flows and signs of progress in diplomatic talks eased immediate supply concerns. Saudi Arabia restarted its East-West oil pipeline at a reduced rate after a drone-related shutdown, with Yanbu exports expected to resume. However, full flows could take six to eight weeks to restore as repairs continue. Meanwhile, Iran said it could reopen the Strait of Hormuz within a week if the US eases military pressure and lifts its blockade, while President Trump said US-Iranian officials held a “very productive” meeting. Nevertheless, heating oil demand could strengthen as winter approaches, while refinery maintenance may constrain distillate production. Russia is also set to extend diesel export restrictions through October, adding to already-tight global distillate supplies. Industry data showed distillate inventories fell by 2.2 million barrels in the week ended September 18.