US heating oil futures fell more than 2.5% to $3.56 per gallon on Thursday, pulling back after a jump of over 10% in the previous session that had taken prices to their highest level in more than a month. The reversal came as traders concluded that the latest US strikes on Iran were unlikely to escalate into a wider regional conflict.
Although security conditions in the Strait of Hormuz have deteriorated and tanker traffic has slowed, markets are not pricing in a complete shutdown of this critical shipping lane. Instead, investors expect energy flows through the Persian Gulf to continue gradually recovering, even amid renewed hostilities.
At the same time, Russia — a key global diesel supplier — announced it would halt exports and shift to being a net importer, following a combination of higher crude prices and repeated Ukrainian attacks that have disrupted operations at major refineries.
Heating oil prices remain significantly above pre-conflict levels, even after easing from the record highs reached in late March. This persistence underscores ongoing concerns about global fuel supplies and refinery output.
