July Pricing Analysis - European Gasoil

SUMMARY: ULSD 10ppm NWE CIF averaged $1,169.00/mt, +18.54% MoM and +58.18% YoY, rising from $943.75/mt (open, 01-Jul) to $1,360.50/mt (close, 31-Jul). Two shocks landed in the same 08-Jul session, the collapse of the three-week US-Iran ceasefire and Russia's full diesel export ban covering producers as well as traders, and ULSD gained $126.00/mt. Gulf risk carried most of that move complex-wide, jet rising $121.00/mt the same session without direct exposure to the ban, while the ban's diesel-specific effect sits in the diffs: the gasoil-ULSD barge diff widened from -$39.76/mt to -$57.83/mt and jet fell behind ULSD to -$6.01/bbl. Russian diesel loadings ran 234,000 b/d over 1 to 10 July against a 2025 average near 817,000 b/d (Kpler), and with June refinery runs 6 mb/d below year-ago and Middle East export refineries still down (IEA), the ULSD crack vs Brent averaged a series-record $73.25/bbl. Escalation continued: Houthi attacks on two Saudi tankers on 22-23 July added a second chokepoint and lifted ULSD $58.75/mt on 23-Jul, reversed almost exactly on the 24-Jul strike pause. The squeeze concentrated in the Mediterranean, Turkish ports going from 7 indications to 112, 110 of them bids, widening the NWE-Med discount from -$8.95/mt to -$35.05/mt. Bull steepening held, M1-M12 widening from +$164.25/mt to +$433.75/mt, and the month's second-largest session came on 29-Jul at +$85.25/mt with the ban four sessions from an undated expiry.

Market Activity

Physical cargo offers collapsed 59.8% to 39 and bid/offer reached 10.03:1 with only 7 trades cleared all month; the cargo market stopped functioning as two-sided
Barges absorbed the flow, trades up 53.5% to 152 and conversion from 41.1% to 62.0%; ARA barrels cleared while cargoes did not, consistent with local inventory being drawn rather than replaced by imports
Derivative diffs took the directional bid, bids up 31.4% to 515 against offers down 7.1%; paper carried the view because physical could not source the barrel
Cargo bidding migrated south, Med bids up 34.4% to 281 against NWE down 35.8% to 52, taking the Med to 84.4% of physical cargo bids from 72.1%
Turkish ports took 39.1% of Med cargo bids vs 3.3% in June: 110 bids, 2 trades, zero offers. Consumer Tupras Trading bid 10 times vs 3
- Intermediary Castleton placed 70 of the 110 while offering 12 NWE cargo diffs and 5 CIF Amsterdam, paying up in the premium market and selling the discount one: suggesting obligation-driven cover, not relative value. Absent from Turkish ports in April and May
Refiner-trader Aramco Trading left the seller top six, fourth on 67 records in June, while third among buyers on 146: the unusual producer-buying signal, pulling offers and staying bid at multi-month highs

Price Action

ULSD CIF gained 44.16% open to close, $943.75/mt (01-Jul) to $1,360.50/mt (31-Jul), averaging $1,169.00/mt vs June’s $986.20 and July 2025’s $739.01 across 23 assessments; Gasoil 0.1% CIF averaged $1,120.02/mt (+16.55% MoM, +56.04% YoY)
Largest session was 08-Jul, ULSD +$126.00/mt (+12.83%) and gasoil +$137.75 (+14.40%), the day the ceasefire collapsed and the export ban was announced; jet gained $121.00/mt the same session without direct exposure to the ban, so Gulf risk carried most of it
Red Sea escalation printed a second distinct spike: ULSD +$58.75/mt (+4.62%) on 23-Jul after the Saudi tanker attacks, reversing -$56.75/mt on 24-Jul as strikes paused; gasoil tracked it at +$54.25 then -$55.75
The second-largest session was 29-Jul, ULSD +$85.25/mt (+6.73%) and gasoil +$86.00 (+7.17%), four sessions before the undated 31-Jul expiry; jet eased 1.41% on the week, so this leg was diesel-specific rather than complex-wide
Intra-month range widened to $423.50/mt on ULSD from $257.75 (+64.31%) and to $384.75 on gasoil from $251.00 (+53.29%), 3.01x and 2.72x the widest of the eight months before March 2026, though both stay third widest of the last thirteen
April, May and June each printed their high in the first three sessions and decayed; July printed its low on 02-Jul and its high on 31-Jul on both grades, so the shock landed inside the month rather than being carried in

ULSD 10ppm NWE CIF Cargoes (USD/mt)

European Gasoil Price Action | General Index — Source: GX Go

Gasoil 0.1% NWE CIF Cargoes (USD/mt)

CROSS-MARKET DYNAMICS

ULSD CIF crack vs Brent averaged $73.25/bbl vs $47.97 and Gasoil 0.1% $66.68 vs $44.59, both series-record monthly averages; with June refinery runs 6 mb/d below year-ago and Middle East export refineries still down (IEA), product stayed tight while crude supply recovered, so the tightness is not a crude passthrough
The gasoil-ULSD barge diff widened from -$39.76/mt to -$57.83 and jet fell behind ULSD from -$1.50/bbl to -$6.01; Russian loadings of 234,000 b/d over 1 to 10 July against a 2025 average near 817,000 b/d (Kpler) is where the ban shows up, in the diffs rather than the flat-price sessions
Physical repriced above paper with a lag, the ULSD CIF premium to ICE LSGO futures still $10.00/mt on 08-Jul then $26.50 (10-Jul), $30.75 (13-Jul) and $47.75 (14-Jul), averaging $32.98/mt vs $16.09 and peaking $56.50
That premium strengthened through the escalation, the opposite of jet, where assessed versus implied widened to -$53.71/mt by 30-Jul: gasoil’s rally carried a physical base that jet’s did not

CROSS-REGIONAL DYNAMICS

[Arb economics, freight, regional spreads, import/export flows.]

ULSD NWE minus Med moved from -$8.95/mt to -$35.05, closing -$56.00, as the Med led Europe higher; gasoil widened from -$18.17 to -$29.06, so the pull was regional rather than grade-specific
The mechanism is in the cargo book: NWE bids fell 35.8% while Med rose 34.4%, and offers fell 72.5% in the Med and 50.0% in NWE. Turkey, one of the two largest buyers of Russian diesel through June, entered as a price-taker; the discount is what NWE conceded to stop losing cargoes
Singapore 10ppm minus ULSD NWE averaged -$108.59/mt vs -$38.80, closing -$163.08 and reaching -$207.34 on 08-Jul, a $69.79/mt widening; no series record, the all-time low being -$334.64/mt (08-Mar-2022)

CURVE STRUCTURE

Bull steepening rather than prompt squeeze: M1 rose $394.00/mt against M12 at +$124.50 with M6 up $203.50, and M1-M2 widened $56.75 against M1-M6 $190.50 and M1-M12 $269.50, the front rallying 3.2x the back and the move graded across tenors rather than confined to the prompt
Gasoil 0.1% steepened in parallel but less, M1-M12 widening $247.50/mt, keeping the diesel-specific premium embedded in the forward curve
July’s closing M1-M12 of +$433.75/mt is not a series record; April 2026 reached +$464.75 on 30-Apr, so the curve remains below its Hormuz-peak backwardation despite the flat-price rally

ULSD 10ppm NWE CIF (USD/mt)

European Gasoil Curve Structure | General Index — Source: GX Go

Gasoil 0.1% NWE CIF (USD/mt)

PRICE VOLATILITY

ULSD CIF CV rose from 8.89% in June to 12.14%, second only to March 2026’s 13.77% in the thirteen months pulled; Gasoil 0.1% rose from 9.11% to 11.14%, second to March’s 11.48%
May’s easing to 6.81% did not hold: three of the last five months sit above 9%, so the elevated regime that began in March is intact rather than decaying
Hedging books calibrated to February 2026’s 3.94% and 4.60% readings are understating realised volatility by 2.4x to 3.1x; until the export ban resolves, 9% to 12% is the working baseline for position sizing

SOMETHING TO WATCH

Russian ban status past the 31 July expiry:
- Observation: the ban ran only to 31-Jul, but on 25-Jul the gasoline ban was extended to end-2026 while diesel was left to be lifted as the market recovers, undated; 29-Jul then delivered +$85.25/mt
- Why it matters: the curve closed at +$433.75/mt M1-M12 and both grades closed at monthly highs, so expiry on schedule is not in the price; a confirmed lifting triggers a front-led unwind, a formal extension reprices M6 and beyond
- What to monitor: Russian statements on the diesel measure; weekly Russian diesel loadings against the 234,000 b/d run rate of early July (Kpler)
Dual-chokepoint risk, Hormuz and the Red Sea:
- Observation: strikes paused 24-Jul and resumed from 28-Jul, with the Red Sea a second front after the 22-23 Jul Saudi tanker attacks and Hormuz transit under 10 commodity vessels a day against roughly 100 pre-war
- Why it matters: with two routes disrupted, de-escalation on one no longer clears the risk premium, and any further Red Sea attack repeats the 23-Jul mechanism directly, worth $55 to $60/mt on the session
- What to monitor: daily Hormuz transit count; Red Sea transit volumes and further attacks on Gulf or Saudi tanker traffic; any US-Iran talks signal
Physical cargo offer withdrawal as the regional canary:
- Observation: cargo offers fell 59.8% to 39 with bid/offer at 10.03:1, and NWE bids fell 35.8% while Med bids rose 34.4%
- Why it matters: while sellers decline to replace offers the NWE-Med discount widens from its -$56.00/mt close; offers returning is an early sign the region has secured replacement supply
- What to monitor: weekly cargo bid/offer by region; the NWE-Med ULSD spread; whether Turkish bids begin clearing, having managed 2 trades on 110 bids
Physical premium to LSGO futures as the scarcity gauge:
- Observation: the premium rose from $12.25/mt (01-Jul) to $41.00 (31-Jul), peaking $56.50, averaging $32.98 vs $16.09
- Why it matters: this is physical tightness net of the paper market, so it leads flat price on the way down; compression toward June’s $16/mt average signals cargo availability returning before the crack reflects it
- What to monitor: weekly close on the cargo-to-LSGO basis; the two-to-four session lag between paper and physical seen after 08-Jul