FX.co ★ Heating Oil Hovers Between Gains and Losses

Heating oil futures hovered around $4.50 per gallon as the disruption of roughly 20% of global seaborne oil transit continues to cripple the flow of middle distillates. This supply shock stems from the near-total shutdown of the Strait of Hormuz and renewed Houthi threats to Red Sea shipping, which have pushed global inventories to critically low levels. Although tentative signs of a diplomatic breakthrough in the five-week Middle East conflict may cap further gains, the rally remains underpinned by a substantial risk premium following President Trump’s ultimatum to strike Iranian export hubs. The deployment of an additional 10,000 U.S. troops and the immobilization of vessels in key chokepoints have established a strong price floor that more than offsets the drag from elevated financing costs and weaker growth prospects. As a result, heating oil prices remain closely linked to WTI crude, with the market awaiting definitive confirmation of a peace agreement before discounting the risk of large-scale damage to global energy infrastructure.