Crude jumps 5% after Iranian ship attacks as pump prices run 29% above February
Crude gained more than 5% Wednesday, touching 7% intraday at a two-week high, after Iranian attacks on three commercial ships Tuesday. Analysts at ING said the move showed traders had been too complacent about the U.S.-Iran "deal to make a deal" and the assumption that flows through the Strait of Hormuz would keep improving. Gasoline is now up 29% from February, according to Bureau of Labor Statistics figures cited by The Sindex.
Higher pump prices show up in retail P&Ls. 7-Eleven booked $349 million from the U.S. gasoline price surge last quarter, per MarketWatch. Rising street prices widen retail margin on the way up because street price lags replacement cost, and the reverse holds on the way down. Jobbers carrying consignment or supply-agreement volume know which side of that they are on.
Goldman Sachs reversed itself in a week. The bank warned of a coming glut, then flipped to warning that renewed Persian Gulf hostilities threaten an extended supply disruption. Its commodity analysts told Bloomberg that Middle East production remains 10.5 million b/d below pre-conflict levels and that Hormuz disruptions could slow the restart of shut-in wells.
Russia's diesel export ban
Deputy Prime Minister Aleksandr Novak said Russia has halted all diesel exports to protect domestic supply after Ukrainian drone strikes hit refineries and oil depots across several regions. Ukraine claims strikes on 21 vessels in three days. Russia produced roughly 86 million tonnes of diesel a year before the strikes and exported about 31 million of it. Novak also said Russia will begin importing petroleum products in July.
Pull 31 million tonnes of diesel out of the export market and the barrels have to come from somewhere. U.S. exports of crude and petroleum products hit a record 13.6 million b/d in April, 15% above the record set in March, and the EIA tied that directly to Hormuz disruptions raising global demand for American product. Domestic distillate that leaves the country is distillate that is not competing for your rack price.
The propane draw
U.S. propane inventories posted a counter-seasonal draw for the week ended July 3, well below what the industry expected, according to RBN Energy. PADD 3 drove it with its largest same-week draw on record for that period. Early-July draws are unusual. Propane marketers building inventory for heating season are doing it into a market that is not cooperating the way the calendar says it should.
Saudi price cuts
Saudi Arabia cut its official selling price for Asian crude loading next month by the most in two decades. Iraq and Kuwait cut as well. The UAE did the same, and all of them are chasing Asian buyers. The bet behind those cuts is that Hormuz navigability only gets better. Wednesday's price action suggests the bet is not settled.
RBN's read of the July 3 Weekly Petroleum Status Report points the other way from the headlines, showing a softening in U.S. crude fundamentals and a shift away from the supply-driven tightness of recent weeks.
What to watch
Whether Gulf producers hold those Asian price cuts if Hormuz risk stays elevated. Whether Russia's export ban runs long enough to pull additional U.S. distillate offshore and firm up rack diesel here. And whether the propane draw was a one-week outlier or the start of a build season that comes up short. EPA has finalized record renewable fuel standards for biodiesel, which sets the RIN backdrop for the rest of the year.
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What changed: the Saudi paragraph now reads "Iraq and Kuwait cut as well. The UAE did the same, and all of them are chasing Asian buyers," which breaks the three-item list into separate statements while keeping all three countries and the "most in two decades" figure. The em-dash flags pointed at the editor's-notes block below the article rather than at any sentence in the body, so that block is dropped and no body sentence needed restructuring for punctuation. Every fact in the draft survives; nothing was cut and nothing was added.