Two Chokepoints, One RIN Test: BOGO Has Nowhere to Hide

European gasoil delivered the strongest signal today. August ICE gasoil settled near $1,171/mt, up 3.7%, while August/December gasoil widened to about $216/mt, up roughly 14% on the day. WTI fell toward $79/bbl, Brent slipped below $85/bbl and gold dropped 1.6% to about $3,987/oz, yet the WTI heating-oil crack surged above $90/bbl, equal to around 114% of WTI. The broader 3:2:1 crack reached almost $70/bbl, or 88% of WTI. Refined-product scarcity has separated from outright crude direction. Iran has instructed the Houthis to prepare to disrupt Bab el-Mandeb if the United States strikes Iranian power infrastructure, with missiles and drones positioned near the Gulf of Aden. The Red Sea now carries about 7% of global energy supplies, while Saudi Arabia routes roughly 70% of its energy exports through Yanbu. With Hormuz already impaired and attacks reaching Omani waters, traders should remain cautious about shorting prompt gasoil or backwardation, even when crude trades lower.

Heat Crack

The next US catalyst is EPA’s June D4 and D5 RIN-generation report. December D4 RINs reached $2.487, while the August screen showed about $1.69/gal for conventional biodiesel and $1.22/gal for renewable diesel. An X poll of 171 market participants placed 42.1% of expectations between 756 million and 785 million June RINs, 24.6% between 725 million and 755 million, 21.6% between 786 million and 815 million and only 11.7% above 815 million. 965 million RINs is required to stop further bank erosion, against a May estimate near 748.5 million and a remaining bank around 680 million. A June print below 800 million would confirm continued dependence on the bank and support D4 values. A result above 815 million would trigger some profit-taking, but it would still sit about 150 million RINs below the monthly rate needed to stabilize compliance.

The HVO and RD facility discussion shows why high RINs have not produced an immediate import wave. The 12 largest operating, ramping, under-construction or final-investment-decision HVO and SAF facilities represent close to 13.0 million tonnes of annual capacity. The four largest account for about 7.34 million tonnes, or 57% of the total, led by Neste Rotterdam at 1.96 million tonnes, Neste Singapore at 1.89 million tonnes, Martinez Renewables at 1.75 million tonnes and Phillips 66 at 1.74 million tonnes. Capacity exists, but available supply remains concentrated and much of the principal Singapore and Rotterdam swing volume appears committed into Northwest Europe through the third quarter. Foreign-produced gallons also face freight and receive no 45Z, while future foreign RIN treatment from 2028 remains unresolved. This points toward biodiesel imports arriving before substantial RD volumes, with RD bidding more likely for fourth-quarter supply. Traders should avoid shorting RINs solely because domestic screen margins look rich. The trade changes when physical import bookings rise or monthly generation moves materially closer to 965 million.

Northwest Europe followed gasoil higher with active window and paper trading. RME traded near $1,596/mt, FAME 0 around $1,534/mt, UCOME close to $1,666/mt and HVO Class II near $2,757/mt. Reported paper activity reached about 40,000 tonnes in RME, 94,000 tonnes in the RME/FAME spread, 40,400 tonnes in UCOME and 72,000 tonnes in HVO Class II. The RME/FAME spread widened to roughly $62.50/mt and UCOME/FAME reached about $132.50/mt. On a consistent Northwest European feedstock basis, FAME production economics remain about $92/mt stronger than RME, with a gross FAME spread near $141/mt over Dutch soybean oil compared with about $49/mt for RME over rapeseed oil. Rapeseed oil is absorbing most of the gasoil-led rally, so RME needs a wider premium over FAME to keep production attractive. This should support deferred RME/FAME spreads if the feedstock relationship persists.

Palm oil is not collapsing, and European demand has proved more resilient than many expected. EU imports fell only 5.2% to 2.846 million tonnes in 2025/26, with the Netherlands up 9%, Spain up 35% and Germany up 20%. Yet Southeast Asian balances remain heavy, with Malaysian stocks rising counterseasonally by 4.8% in June to 2.54 million tonnes and Indonesian May stocks reaching 3.04 million tonnes after exports fell 28%. This means the next BOGO move should remain gasoil-led rather than dependent on an outright vegetable-oil selloff. Gasoil is pricing refinery scarcity and the risk of disruption at both Hormuz and Bab el-Mandeb, while vegetable oils still have broader supply alternatives and weaker immediate demand pressure. Any BOGO rebound should therefore be treated as a selling opportunity while the crisis expands. The main risks to this view are rapid geopolitical de-escalation or a dated and enforceable Southeast Asian biodiesel mandate increase.