Fuel Shortages, River Lows, Shadow Crude: Fragile Balances Define Energy Flows

Gasoil remains firmly backwardated even as China begins to release cargoes ahead of Golden Week. Asia’s spot market saw more tenders and private sales, but export quotas still look constrained at roughly 600,000 tons for October, leaving structure supported. Meanwhile, Russia is preparing to ban refined product exports to alleviate domestic shortages even as it accelerates crude shipments. Against this backdrop, ICE gasoil gained $10 to $710, while the ARAG barge market showed premiums now trailing the month’s average on F0 at +654 over ICE gasoil, flat price $1,365. RME stayed in line with the monthly average at +742 ($1,453), while UCOME lagged at +777 ($1,488). The UCOME/RME spread widened to +35.

On the vegoil side, the most dramatic shift comes from Argentina’s decision to suspend export taxes on soybeans and by-products. This has unleashed a wave of cheaper Argentine soyoil into the market, pushing European November values down to €1,035/mt — now undercutting RSO at €1,075/mt. India quickly stepped in, booking 30–45,000 mt of Argentine soyoil for early 2025 shipment. The knock-on effect has been heavy pressure on palm oil: Malaysian CPO futures slid to six-week lows, with additional weakness visible in Chinese vegoil futures. In the physical market, India remains an active palm buyer, with CFR trades reported at $1,125–1,140/mt.

Policy shifts in Europe add to the complexity. The EU has once again delayed the implementation of its deforestation regulation (EUDR), even as it signed a fresh trade deal with Indonesia that eliminates tariffs on palm oil. At the same time, Bloomberg data show a surge in China’s crude imports from Indonesia — levels that even exceed Indonesia’s average production — reinforcing suspicions of Russian crude being transshipped through Jakarta. This puts Brussels in an awkward position, striking trade liberalization with a partner now caught in Moscow’s shadow supply chain.

In the U.S., the EIA projects distillate inventories to end 2025 and 2026 at multi-year lows, reflecting a sharp 1H25 draw, refinery closures, and strong export pull from Europe. The combination elevates price volatility risks heading into the harvest and winter heating season. At the same time, U.S. D4 RINs continue to weaken at $0.99, while conventional biodiesel crush margins remain stuck at –42 c/gal versus December, underscoring the sector’s struggle. To compound matters, the Mississippi River remains at critically low levels and is not expected to improve through the gut slot harvest, threatening further disruptions to grain and feedstock flows.

Overall, backwardation endures despite China’s trickle of exports, Russia’s restrictions highlight domestic tightness, the U.S. faces chronically low stocks compounded by inland logistics stress, and Indonesia’s role in transshipping Russian crude casts a new geopolitical shadow just as it cements EU market access. On the feedstock side, Argentina’s tax suspension is reshaping trade flows overnight, CPO is sliding, the EU is delaying sustainability enforcement, and palm oil tariffs are being lifted. A fragile balance with plenty of volatility risk remains the theme.