US heating oil futures jumped to $4.92 per gallon on Tuesday, the highest level in three weeks and nearing last month’s record of $5.30, as extreme supply tightness again took center stage in the market. Russia and Ukraine traded strikes on each other’s power and gas infrastructure, effectively extinguishing already-low expectations that the energy ceasefire promoted by President Trump would hold. This raised concerns over further attacks on major Russian refineries.
The escalation also intensified skepticism that Russia would follow through on its pledge to release 36 million barrels of diesel for export. That commitment had been doubted from the outset, given that a domestic distillate shortage had already forced Moscow to halt exports in the previous quarter. At the same time, attacks on vessels transiting the Persian Gulf kept tanker freight rates near record highs and constrained exports from the region. A shortage of crude supplies for major refineries had already pushed prices to all-time highs and led US officials to briefly consider imposing an export ban.
