Three Ship Classes Hit in Hormuz Strait as Distillate Markets Price Logistics Risk

Reports today that three different classes of ships were attacked transiting the Strait, container vessels, bulk carriers and tankers, immediately caught the attention of energy traders because the pattern does not appear random. When attacks touch all three segments of maritime trade it sends a signal beyond crude oil alone. It speaks to the vulnerability of the broader logistics system that moves energy, commodities and manufactured goods through one of the world’s most important maritime corridors. Markets have not yet reacted dramatically in outright crude prices, but the signal is already visible in the distillate complex.

ICE gasoil expires tomorrow and the nearby spread softened into expiry while the deeper curve tightened sharply. Mar Apr settled at +54.50 per metric ton, roughly 9 percent lower than the previous settlement as positioning shifted ahead of expiry. The more telling move sits further along the curve where Mar Jul strengthened to +283 per metric ton, about 25 percent stronger than the prior session. That structure suggests the market is beginning to price a longer duration tightening in diesel availability rather than a temporary disruption.

The Atlantic basin remains dislocated. ICE gasoil still trades roughly 110 dollars per metric ton below NYMEX heating oil. At that level arbitrage from the United States into Europe remains uneconomic, leaving Europe dependent on Middle Eastern and Asian barrels for incremental diesel supply. If tensions in the Middle East escalate further, this discount is unlikely to persist. In a larger supply disruption ICE gasoil would likely converge toward NY heating oil as both benchmarks begin pricing the same scarcity signal.

Asia already reflects a stressed distillate system. Singapore 10 ppm gasoil is trading near 153 dollars per barrel with refining cracks versus Dubai crude recently reaching about 43 dollars per barrel. Cash differentials have climbed toward +20.5 dollars per barrel over benchmark levels. These numbers reflect genuine prompt tightness rather than speculative activity. Refiners have reportedly held back April spot sales and in some cases attempted to repurchase March cargoes. Marine gasoil prices in Singapore also remain extremely elevated with bunker levels recently trading near 1596 dollars per metric ton after spiking close to 1768 dollars earlier in the week.

Against that backdrop Europe continues to watch supply security carefully. A small but interesting development today came from reports that the European Union is reviewing sanctions placed on Dutch oil trader Niels Troost, whose trading company became active in moving Russian crude and products into global markets after the Ukraine invasion. The review does not alter sanctions policy toward Russia itself, but it hints at the practical reality facing European policymakers. Russian barrels continue to circulate through intermediaries and shadow fleets, and in a tightening distillate market the priority increasingly becomes maintaining global flows rather than further restricting them.

In the ARAG biodiesel window physical activity remained thin once again. RME traded around 410 over gasoil which corresponds to a flat price near 1456 dollars per metric ton. FAME 0 traded around 293 over gasoil or roughly 1340 dollars per metric ton. UCOME cleared near 398 over gasoil translating to approximately 1444 dollars per metric ton flat price. HVO Class II changed hands near 1377 over gasoil implying about 2899 dollars per metric ton. Traders continue to prefer paper exposure rather than committing to prompt physical barrels during periods of elevated volatility.

Paper activity over recent weeks reflects that shift in positioning. Week nine recorded the largest trading activity with about 237 thousand tons of RME, 427 thousand tons of FAME 0, 290 thousand tons of UCOME and roughly 186 thousand tons of HVO. More recent weeks have seen activity drop toward roughly 480 thousand tons combined as participants wait for clearer geopolitical signals.

Feedstock markets in Europe held firm. Dutch soybean oil for March shipment was offered near 1140 euros per ton FOB while German soybean oil was closer to 1180 euros per ton. Rapeseed oil in the Netherlands traded around 1180 euros per ton and sunflower oil in northern European ports remained near 1480 dollars per ton.

Agricultural logistics from Brazil are also tightening. Exporters report delays in phytosanitary certification as authorities increase inspections following requests from Chinese regulators. Some exporters have temporarily paused soybean shipments to China while documentation procedures are clarified. Demand itself appears healthy with Chinese crushers maintaining positive margins and meal demand improving. Brazil’s soybean export program stands near 32 million tons in early March compared with about 28 million tons at the same point last year, yet Chinese coverage for April and May shipments remains roughly 2.6 million tons behind last year.

In the United States ethanol production continues to run at historically strong levels with output reaching 1.126 million barrels per day last week, tying the third highest weekly level on record and representing more than 300 million gallons of weekly production. Compliance markets also remain supportive for biodiesel economics. ICE December 2026 D4 RIN futures traded near 1.63 dollars per RIN while screen biodiesel crush margins improved toward roughly 0.64 dollars per gallon - a level last seen in April 2025.

The dominant theme across all markets remains distillate supply risk. When attacks reach multiple classes of ships in the Strait, Asia trades diesel at record cracks and Europe quietly reassesses the practicality of restricting Russian intermediaries, the message becomes clear. Global energy markets are beginning to price the possibility that logistics, not crude supply alone, may become the binding constraint. If that risk grows, diesel will continue to anchor the entire biofuel and refining complex.