Armistice Day Reality Check: Hormuz Mines Reignite Diesel While ARAG RME Premiums Crack Ahead of the Rhine Wave
While Veterans Day in the United States and Armistice Day across parts of Europe thinned banking liquidity and pushed the weekly EIA petroleum report to Thursday at 10:00 AM MST, open futures screens staged a decisive reversal higher—shrugging off a hotter-than-expected +0.4% month-on-month October US CPI print, Federal Reserve Governor Christopher Waller's call for a December rate hike of 25 to 50 basis points, and a 0.73% rally in the US Dollar Index to 102.875. Physical reality quickly punctured this week's "paper peace" narrative in the Middle East: Iran's navy announced a tanker hit a mine east of Hormuz and caught fire—identified by Indian officials as the Saudi-flagged NCC Fajr and corroborated as a maritime incident by UKMTO—while Saudi state media confirmed a "limited fire" on the East-West Petroline near Medina (the critical 4+ mb/d Red Sea bypass) and Iranian Security Chief Rezaei declared Tehran will not allow "even a single particle of enriched nuclear material to leave Iran". At the same time, satellite tanker-tracking market info showed 7-day average Persian Gulf crude loadings slipping back below 10 mb/d over the past three days (8.3 to 9.7 mb/d) as Saudi liftings dropped to roughly 2.6 mb/d, leaving global visible oil inventories down 483 million barrels (-2.0 mb/d) since March 1 at 7,819 million barrels. Compounded by Ukraine striking Russia's Baltic Sea port of Ust-Luga overnight and the Primorsk-loaded Russian ULSD tanker Agioi Fanendes (40 kt) making a U-turn 400 nautical miles off New York after New Jersey's governor warned terminals against federal sanctions violations, January Brent reclaimed $93.01 per barrel (+$1.52) and December WTI climbed to $87.13 (+$1.09). Middle distillates led crude by nearly two-to-one: December NYMEX ULSD jumped 12.19 cents (+2.95%) to $4.2528 per gallon (lifting the implied WTI crack over $4 to $91.49/bbl against Tuesday's verified $4.1309 settle), while ICE gasoil surged $45.25 in November to $1,326.00 per tonne and $36.50 in December to $1,264.25 per tonne, re-widening the Nov/Apr backwardation just before Nov expiry by $24.25 back above +$205.25 per tonne.
In Europe, London's physical ARAG barge window stayed open through Armistice Day and delivered a major plot twist: as benchmark window gasoil jumped $66.00 from yesterday to $1,281.00 per tonne, physical biodiesel differentials buckled across the board—blinking two days ahead of Friday's Rhine River crest. Physical RME printed a single window barge deal at +$549.00 over gasoil—a violent $115.00 per tonne single-day drop from Tuesday's +$664.00 average (with post-window bids and offers softening further to +$525/+$551) that dragged flat-price RME down $49.00 to $1,830.00 per tonne even on a surging gasoil tape. With FAME 0 seeing no deals and assessed $45.00 lower on differential at +$140.00/mt ($1,421.00/mt flat, +$21.00 d/d), the physical RME/FAME 0 spread collapsed $70.00 per tonne in a single session from +$479.00 down to +$409.00 per tonne. UCOME likewise went untraded and gave back nearly all of Tuesday's premium spike, dropping $63.00 on differential from +$400.00 to +$337.00/mt ($1,618.00/mt flat, +$3.00 d/d) to pull the physical UCOME/FAME 0 spread down $18.00 to +$197.00 per tonne, while HVO Class II printed two deals at +$950 and +$955 averaging +$952.50/mt ($2,605.65/mt flat, +$61.85 d/d, with SAF rebounding to $2,826.46/mt). For European producers, today's physical soft oil rally in Hamburg compounded an acute margin squeeze on non-rapeseed grades: after Tuesday's spot assessments had already crushed the European FAME/SBO gross margin by $54.29 down to $29.18/mt (versus $547.42/mt on RME/RSO), broker offers for January '27 Dutch mill soyoil jumped €20 today to €1,335.00/t (+€15 in Feb–Apr to €1,320.00/t)—opening a €65/t premium over January Dutch rapeseed oil (€1,400 Nov, €1,300 Dec, €1,270 Jan unchanged; Feb–Jul up €10 to €24 at €1,228 and €1,224/t) and compressing window FAME 0's spread over live December CBOT bean oil to barely +$9.17 per tonne. Meanwhile, German federal waterway data (WSV/PEGELONLINE) showed Kaub ticking up 4 cm today to 16 cm (61 cm below the 77 cm GIW mark, keeping €254.50/t Basel gasoil barge freight, top low-water container surcharges of €1,075/€1,280, and 37-to-48-hour Rotterdam/Antwerp port congestion intact), though updated ELWIS runs show the rise plateauing at 69 cm on Saturday just as the German weather service (DWD) warns a Thursday–Friday surge of polar air will drop Alpine snow lines to 800 meters. However, this is not snow-melt season so not necessarily wide relief for Rhine River.
Across the Americas, CBOT soybean oil rallied sharply alongside petroleum, yet front-end distillate outperformance gave US blenders modest screen relief while Washington and state capitals pulled biofuel policy in opposite directions. December CBOT soybean oil climbed 1.27 cents (+2.02%, or +$28.00/mt) to 64.04 cents per pound ($1,411.83/mt), supported by the USDA trimming global vegoil reserves to a five-year low of 29.7 mmt and state-level NASS revisions revealing a steep 4 bpa soybean yield cut in top-crushing Illinois (down to 64 bpa, masked nationally by state records in Iowa at 65 bpa and Minnesota at 54 bpa). Because December heating oil (+12.19¢/gal) and December gasoil (+$36.50/mt) outpaced front-month bean oil (+9.53¢/gal equivalent), December BOHO compressed 2.67 cents to +55.02 cents per gallon and December BOGO tightened $8.50 to +$147.58 per tonne (even as Mar–Jul '27 BOGO widened $3.56 to $8.38/mt), lifting screen December renewable diesel crush margins 1.36 cents to $0.9810 per gallon and conventional biodiesel crush 2.63 cents to $1.9269 per gallon as ICE December 2026 D4 RIN futures traded 217 holiday lots at $2.045 (a half-cent inverse over Dec '27 at $2.040 on 191 lots). Politically, Louisiana Governor Jeff Landry moved to expand his and Alabama's 2027 RFS waiver petition to the EPA by inviting Governors Abbott (TX), Reeves (MS), and Sanders (AR) to sign on ahead of the December 4 SRE reallocation comment deadline, drawing counter-fire from Nebraska Senator Pete Ricketts on Capitol Hill as Ohio lawmakers introduced H.B. 1036 to create a nonrefundable state biodiesel and RD production tax credit (excluding SAF) and post-election tallies confirmed Senate SAF Act sponsors Amy Klobuchar and Joni Ernst will exit the chamber in January while Rep. Brad Finstad heads toward a late-November recount in MN-01. Physically, however, US soyoil remains stranded on its domestic RFS island: broker quotes for Paranaguá FOB paper basis sit at -850/-950 for December (~$1,185/mt cash, more than $225/mt below the CBOT board), while Brazilian FOB bean premiums closed surprisingly firm on the strongest farmer selling day since September despite the Real weakening past 5.60, the USDA's +7.5 mmt combined South American corn crop upgrades, and long-term Chinese state shipping support for a 3,000+ km Mato Grosso-to-Chancay rail bypass creating a new Chicago in the South hemisphere.
In Asia, palm and Chinese vegetable oil futures surged on short-covering—with January BMD CPO jumping 151 ringgit (+3.55%) to 4,407 MYR/t, broker quotes on USD Malaysian CPO swaps rallying $22/mt to $1,108.50/$1,111.00 in December ($1,129.25/$1,131.75 Jan), and Dalian January palm olein and rapeseed oil gaining 2.06% (8,954 CNY/mt) and 1.42% (9,984 CNY/mt)—but early-November physical trade info validated deep skepticism over MPOB's October stock report. Cargo surveyor market data pegged November 1–10 Malaysian palm exports down as much as 13% month-on-month at 472,321 tonnes (with other surveyors down 1.9% to 2.3%), driven by a 63% collapse in shipments to India and the subcontinent to just 56,500 tonnes (down from 152,675 tonnes in Oct 1–10, only partly cushioned by EU liftings rising to 133,351 tonnes). With Indonesia's 20% November export duty and levy reduction diverting buyers away from Malaysia and domestic refineries reportedly halting deliveries from independent Malaysian millers amid full tanks, regional broker models are sharply split on November end-stocks between 3.39 mmt and 3.57 mmt, while today's violent gasoil rally dragged live December POGO ~$14.50/mt deeper into discount at -$154.50 per tonne (against true live December BOPO of +$302.08/mt and South Asia cash swap BOPO of +$124.50/mt which is more in line with substitution values), proving Tuesday's POGO bounce toward -$86 was borrowed. Underneath Dalian's paper bounce, China's physical oilseed and waste-oil complex remains cold: market info showed weekly Chinese soybean crush falling 210Kt below expectations to 1.92 mmt (lifting imported port bean stocks to 7.90 mmt), yesterday's China state reserve auction cleared just 34% of 204 kt offered, October sow slaughter jumped 30% year-on-year to 240.6k head, and several northern Chinese UCO processors have stopped buying altogether after customs data showed September UCO exports dropped 23.4% month-on-month to 259.01 kt—leaving East China UCO flat at ¥7,450/¥7,750/t ($1,175/t FOB bulk) and US Gulf delivered UCO indications steady near 70.8 cents per pound (~$1,560/t).
For traders navigating the rest of the week, today's holiday action delivers two unmistakable signals: first, the absence of full-scale US military strikes does not create a Middle East or Black Sea peace dividend—it locks in an attritional status quo where mines, pipeline fires, Ust-Luga port attacks, and the USDA's 27.4 million tonnes of trapped Russian and Ukrainian wheat steadily erode thin global inventory buffers. Second, today's $115/mt crack in the ARAG physical RME differential and $70/mt drop in RME/FAME 0 to +$409/mt suggests part of November's historic winter-biodiesel blowout was indeed an inland Rhine bottleneck premium that sellers are rushing to monetize before barges regain draft. The next immediate test arrives tomorrow, Thursday, November 12 at 10:00 AM MST, when the delayed EIA report clears up conflicting preliminary industry inventory numbers (clarified by market analysts as a +9.0 mb crude build rather than -9.8 mb, against broker models near +2.02 mb) and reveals whether US distillate stocks—sitting below the 100-million-barrel operating floor at 99.3 mb with New York Harbor's Bayway refinery still on Day 24 of its lockout ahead of a floated November 16–18 return—drew hard heading into PADD 1 winter. Twenty-four hours later on Friday, November 13, watch whether RME differentials find a floor around +$525/+$550/mt or keep sliding as Kaub approaches 56–69 cm right into the Alpine cold front, followed by November 1–15 palm export surveyor numbers around November 16, the benchmark RVO weighting update on November 18, and whether Texas joins the Gulf governors' waiver bloc before the EPA's December 4 SRE reallocation comment deadline. My view remains that BOPO futures show that SBO is clearly overvalued but then US is an RFS island yet we cannot ignore the continuing attempts at undermining RFS both on waivers and missed deadlines.
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