Over the past fortnight, international oil prices have surged significantly. This follows the effective collapse of the U.S.-Iran ceasefire agreement, with both sides continuing military operations and vying for control of the Strait of Hormuz. Although WTI crude prices remain notably below the peak of just under $113 per barrel set on April 7, 2026, gasoline and distillate refining margins have continued to reach exceptionally high levels. On Wednesday, the gasoline crack spread at the New York Harbor versus U.S. WTI crude was reported at $57.5 per barrel, equating to an additional cost of $1.37 per gallon added to the base crude price. In contrast, before the outbreak of the U.S.-Iran conflict, this crack spread was only around $28 per barrel, less than half the current level.
As the United States continues its military strikes against Iran, U.S. crude prices have rebounded sharply, approaching $79 per barrel. Iran has retaliated with attacks on neighboring countries hosting U.S. forces, including Kuwait, Bahrain, and Jordan.
The four-week moving average for implied gasoline demand in the U.S. fell by 92,000 barrels per day last week. Concurrently, U.S. motor gasoline inventories have declined for three consecutive weeks and remain well below the five-year seasonal range.
U.S. distillate demand saw a substantial week-on-week drop of over 1.15 million barrels per day. Distillate inventories increased by 4.56 million barrels but are still positioned near the low end of the five-year seasonal range.
U.S. jet fuel stocks rose by 842,000 barrels, reaching their highest seasonal level since at least 2006. Meanwhile, passenger traffic at U.S. Transportation Security Administration (TSA) airport checkpoints has fallen below year-ago levels.
The U.S. refinery utilization rate increased by 0.4 percentage points week-on-week to 96.2%, significantly above the five-year seasonal high of 94.3%.
The U.S. Strategic Petroleum Reserve (SPR) declined by nearly 3 million barrels, a noticeable slowdown from the previous week's draw of 6.2 million barrels.
U.S. crude oil production remained flat week-on-week at 13.9 million barrels per day. Data from Baker Hughes indicates a slowdown in the rig count increase, with only one additional rig added last week.
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