Markets Resume Slide as Trade Tensions Escalate, Biofuels Feel the Heat

Global markets have resumed their downward trajectory as the U.S. imposes another round of tariffs on China—escalating duties by 50% after Beijing refused to engage in negotiations. The rapidly deteriorating trade relationship is reigniting fears of COVID-era supply chain disruptions. Despite the undeniable interdependence between the Chinese and U.S. economies, both businesses and governments appear ill-prepared for the potential fallout of a full-scale trade war.

The energy sector is showing clear signs of strain. Gasoil is barely holding above $600/mt, and futures from June through Q1 2026 are trading even lower. Market structure is diverging: Heating Oil futures in the U.S. display a contango pattern, while ICE Gasoil shows a $2 backwardation from June to November. This simultaneous contango in the U.S. and backwardation in Europe underscores growing dislocation and uncertainty in refined products while heat crack margin remain at near $26.61/brl insuring we are going lower.

The biofuels complex is equally unsettled. D4 RINs have softened to 1.022, pushing biodiesel screen crush margins deeper into negative territory at -27 cents/gal—despite soybean oil pricing at 1.65 times gasoil.

In Northwest Europe, spot barge activity remains steady, but outright prices are slipping. RME felt the pressure most today, falling to $1266 as rapeseed oil prices fell, reflecting in falling premium to +655 ICE gasoil. UCOME, however, fell further also on confusing tariff news by $13/mt to $1,432/mt amid nervous selling and mounting concerns over U.S. tariff impacts on feedstock flows. Rapeseed oil declined $22/mt, though gross replacement margins for RME remain positive at $88/mt. FAME 0 margins have narrowed to just $31/mt, while UCOME continues to post a gross margin of $190/mt despite pricing pressure on UCO.

Adding to market tension, ISCC has firmly denied rumors of a 2.5-year certification penalty over traceability issues, calling such reports “entirely false.” Read the full ISCC statement here.

Meanwhile, structural regulatory shifts are accelerating. Europe is moving decisively toward harmonizing incentives for waste oils, and the sunset of double-counting mechanisms appears increasingly likely. With regulatory headwinds and global trade dynamics converging, biofuels market participants are entering a period of profound recalibration.