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U.S. oil refiners are seeing the green side of renewable fuels – green as in money – after seeing margins squeezed for years, Reuters reported. Demand is surging thanks to the U.S. government’s aggressive new biofuel mandates and the sharp runup in diesel prices resulting from the Iran war.
The report noted that Valero, the nation’s largest biofuel producer, saw its renewable diesel business swing to a $139 million profit in the first quarter after a $141 million loss in the same period a year ago. Profits for its ethanol business quadrupled, with executives call biofuel mandates a “pretty strong tailwind.”
Reuters noted:
- HF Sinclair’s renewable diesel operations swung to a profit of $133 million after a $17 million loss a year earlier.
- Phillips 66 sharply narrowed losses in its renewable fuels division and an executive said investors should expect a “substantial difference” in renewable segment performance from a year ago.
The report explained that the new rules are helping drive up the price that refiners can get for tradable Renewable Identification Numbers (RINs). Refiners who blend more biofuel than they are required to can sell these credits to others that lack the capacity to blend enough biofuel themselves. RIN credits are divided into different types, which include D4 credits for biodiesel and renewable diesel and D6 credits for corn-based ethanol. Prices have surged more than 80% in 2026 to over $2 each, Reuters said.
“We’ve waited through the hard times, let’s go harvest the good times,” HF Sinclair’s CEO Franklin Myers told investors earlier this month.
U.S., Brazil export boom: Speaking to demand, the U.S. and Brazil – the world’s two largest ethanol producers – are on track for a jump in exports of the product this year due to strong demand from countries looking to expand their fuel sources due to the continued closure of the Strait of Hormuz.
Reuters said the U.S. has seen a 20% increase in ethanol exports so far this year, on top of record shipments last year. And Brazil could more than double its foreign sales in the new trading season (2026/27) that started in April, representatives for the biofuels industry told Reuters this week.
Council talk: It’s clear that soybean traders didn’t get what they were hoping for out of President Donald Trump’s summit with Chinese leader Xi Jinping this week, namely an indication that sales beyond the 25 million metric tons a calendar year the administration says Beijing has committed to might be in the cards. Remarks by China’s foreign minister, Wang Yi, may offer some encouragement over longer term prospects. He said both nations will work to establish councils to address mutual concerns over market access and agricultural products, according to Bloomberg. Early Friday, U.S. Trade Representative Jamieson Greer, in a Bloomberg Televison interview, noted the 25 million metric ton per year soybean deal agreed last October and said the U.S. also expects to “see an agreement for double-digit billion purchases of ags over the next three years per year coming out of this visit.”
Bond-market alarm bells: Evening Report noted yesterday the growing disconnect between the relentless AI-driven rally in the stock market and the sharp, recent rise in Treasury and other government bond yields. At question was when those surging yields would become an issue for the stock market.
We didn’t have to wait long. The S&P 500 fell 1.2% Friday for its worst session since March as the 10-year Treasury yield jumped to 4.595%, its highest since February 2025 and the yield on the 30-year Treasury closed at 5.127% – its highest since July 2007.
The 10-year U.S. Treasury yield jumped to 4.595%, the highest since February 2025 and its biggest one-day jump in more than a year. The 30-year Treasury yield rose to 5.127%, its highest closing level since July 2007. It isn’t just a U.S. phenomenon. Yields are rising in Japan, while a political crisis in the U.K. is sending the nation’s oft troubled of late bond market into another bout of turmoil.
There’s more to it than simple expectations that an inflation push from surging oil prices will force central banks to hike interest rates, said economist David Rosenberg of Rosenberg Research, in a Friday note. He writes:
- As the U.K. shows, it also reflects growing concern about fiscal challenges colliding with political uncertainty. All of this comes at a time when central banks must assess whether monetary policy can contain supply-shock-driven pricing risks, even as the latest Fed research shows that the cyclical component of core PCE inflation appears to be trending lower.
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