Oil prices rose in the first few hours of trading on Sunday evening US time, the first opportunity to react to the US and Israeli strikes on Iran and the latter’s response, with diesel rising faster than both crude and petrol.
Such a move can be expected given the fact that much heavier crudes are exported from countries like Iran and Saudi Arabia and through the potentially closed Strait of Hormuz in much larger yields than crudes like diesel refuels that produce a larger percentage of lighter fuels, such as gasoline or naphtha.
Minutes after 7 p.m. ET, ultra-low sulfur diesel (ULSD) for the April contract on the CME Commodity Exchange, the first month it was listed, rose 24.55 cts/g to $2.8415/g, an increase of 12.84%. Later, it traded above $2.90/g.
International crude benchmark Brent for the May contract was up about 7.4% to $78.27/barrel. Later it traded above $82/b.
RBOB gasoline, a semi-finished gasoline product that is a proxy for gasoline trading, rose 6.95%, 15.67 cts/g, to $2.4104/g for the April contract.
West Texas Intermediate, the benchmark US crude, was up 7.28% at $71.90, up 4.88%. This is the April contract price.
More than two years high is in sight
If ULSD settles at $2.84/g, it will be CME’s highest settlement since February 13, 2024, when it settled at $2.8959/g. For Brent, settlement above $78.27/b would be a high of $77.49/b on January 28, 2025.
The national average retail diesel price published by AAA, which is updated daily, was $3.761/g on Sunday. This includes a price of $5.107/g in California. The AAA price won’t reflect any changes as a result of the Middle East war, but now is a starting point for gauging how much diesel will rise at the pump in the coming days and weeks.
The weekly average retail diesel price released by the Energy/Energy Information Administration, which is the basis of most fuel surcharges, was released on Tuesday, at $3.809/g on Monday, the sixth consecutive weekly price increase.
Oil markets, which begin trading on the CME Commodity Exchange at 6 p.m. ET on Sunday and for trading in Brent two hours later on the Intercontinental Exchange, went into the unknown world in their early trading as they tried to digest the many developments in oil markets since the US and Israeli attack on Iran and the subsequent response by that country.
Among the developments that traders saw on Sunday as a fundamentally different world in oil:
