US-Iran Conflict: Impact on U.S. Refined Product Prices

Light Ends

Regional Price Reaction: Pasadena CBOB and Linden RBOB rallied ~3% on each of March 2 and, a steady grind rather than a spike. CBOB closed at $2.1774/gal, RBOB at $2.3124/gal. Gasoline's distributed supply chain and limited Hormuz exposure continue to cap upside to roughly a quarter of the 24-30% two-day distillate moves.
YTD Context: Gasoline benchmarks up 27-31% since Jan 2 -- about half the distillate move.The rally remains steady and structural; the conflict has added momentum, not a step-change.
June 2025 Comparison: Pasadena CBOB at $2.1774 has now edged past its June high of $2.1355. Linden RBOB at $2.3124 remains just below its June peak of $2.3320. In June, gasoline and distillates peaked in line. Now distillates are 25-35% aboveJune highs while gasoline barely breaches them. This remains a middle distillate event.
Forward Curves: RBOB Pasadena curve partially recovered on March 3, with the frontend up ~7 cpg from March 2 but still 6-10 cpg below pre-conflict levels.Seasonal structure intact. The curve is not confirming the spot rally -- suggesting the market views the gasoline impact as temporary.
Liquidity: March 2 saw trade counts dip ~8% and volume down ~23% vs the prior two-week average. March 3 rebounded, with counts up ~27% and volume up ~30% above average. No sustained liquidity disruption.

Regional Price Reaction: Fuel oil extended sharply on March 3, with HSFO 3.5% USGC up another 11.4% to $69.29/bbl and Resid No.6 NYH +10.8% to $72.54/bbl. VLSFO 0.5% surged 9.1% to $82.03/bbl. Two-day gains range from 9-13% across the complex. The hi-lo spread compressed slightly as all grades rallied, driven by Middle Eastern supply disruption and rising bunker demand from Cape reroutes.
YTD Context: HSFO up 43.2% from Jan 2, Resid up 40.5%, VLSFO +43.4%. Fuel oil has now caught up to distillates on a percentage basis after lagging on day one.
June 2025 Comparison: VLSFO has now breached its June high ($82.03 vs $77.11, +6.4%above). HSFO at $69.29 and Resid at $72.54 are within 2-3% of their June peaks. If Hormuz remains shut another session, all three benchmarks will likely exceed June levels.
Forward Curves: HSFO curve continued steepening on March 3. Front end up ~$6/bbl day-on-day, back end up ~$3.50/bbl. Backwardation widened from ~$5/bbl pre-conflict to ~$13/bbl. Near-term tightness in heavy grades intensifying.
Liquidity: Fuel oil activity accelerated further on March 3, with trade counts up ~130% vs the prior week's average and up ~43% vs March 2. The most active product class by participation growth, consistent with urgent bunker procurement.

Regional Price Reaction: The de facto Hormuz closure following US-Israel strikes on Iran (Feb 28) triggered a two-day rally of 24-30% across NA distillates. March 2 saw 12-13% surges; March 3 extended another 10-15%, with all benchmarks breaking $3.00/gal. Pasadena ULSD hit $3.0719/gal, Pasadena jet $3.1269/gal, Linden jet $3.2019/gal. Jet outpaced ULSD on day two (+15% vs +11%), consistent with ~19% of seaborne jet transiting Hormuz.
YTD Context: Distillates up 52-65% since Jan 2, the steepest YTD rally of any NA refined product class. The two-day move alone accounts for roughly half the entire YTD gain.
June 2025 Comparison: Current levels now 25-35% above June's conflict highs -- Pasadena ULSD $3.0719 vs $2.4594; Pasadena jet $3.1269 vs $2.3236. June's rally took three weeks to peak then reversed. This time we blew past those levels in two sessions; Hormuz shut vs merely threatened.
Forward Curves: ULSD curve steepened further on March 3. Front end surged to $129/bbl (+$13/bbl day-on-day), back end lifted only ~$2/bbl. Prompt-to-24mo backwardation widened from ~$15/bbl pre-conflict to ~$35/bbl -- more than doubling. Severe near-term tightness with limited pass-through to 2027+.
Liquidity: Trade counts dropped ~40% w/w as tensions built. March 2 volume surged ~150% above the prior week's average. March 3 activity held steady at similar levels-- market has not yet found a clearing level.