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Oil futures were under pressure Tuesday, with West Texas Intermediate crude, the U.S. benchmark, remaining below the $90 a barrel threshold after Energy Secretary Chris Wright said there had been a “meaningful” rise in the number of ships traveling through the Strait of Hormuz. Around a fifth of the world’s oil supply moved through the prior to its closure by Iran at the end of February.
- “I would say rising very meaningfully,” Wright said at an Atlantic Council event when asked how flows had changed over the past week or two, the Financial Times reported. He added it would take “many months” for flows to fully recover.
However, Kpler, which uses satellites and other data sources to track maritime traffic, said in an X post that Strait of Hormuz transit activity remained constrained from June 5 to 7, with only eight monitored crossings across commercial and non-commercial traffic. The total was one below the single-day count on June 4 and 14 below the previous weekend.
Oil futures came off session lows but remained lower on the day after President Donald Trump said in a Truth Social post that the U.S. must respond militarily to the Iranian downing of a U.S. Apache helicopter over the strait.
Nearby WTI futures traded just below $120 a barrel in early March but have pulled back. Reduced import demand from China, ramped up U.S. exports, and massive drawdowns of strategic petroleum reserves and other factors have helped pull prices down, though a continued closure of the strait threatens to create a severe crunch, analysts have warned.
Senate E15 hopes: Senate Majority Leader John Thune said Monday that senators are working on a new bill to allow year-round sales of E15, Agri-Pulse reported. “We are trying to get an E15 bill and what it looks exactly like is in the process of being determined,” the South Dakota Republican said, according to the report. Separately, Senate Agriculture Committee Chairman John Boozman said he doesn’t expect proposed farm bill legislation coming out of his committee to include an E15 provision, saying it’s “really not under our jurisdiction.” The Arkansas Republican also noted the House had difficulty trying to combine E15 with the farm bill. The House ultimately passed standalone legislation in a narrow vote.
Ethanol exports pull back in April: U.S. ethanol exports totaled 171.6 million gallons (mg) in April, coming in below 200 mg for the first time in 6 months amid broadly weaker shipments across several key markets, the Renewable Fuels Association said Tuesday. Canada reversed its March surge, declining 14% to 64.8 mg, while maintaining its position as the leading destination for denatured fuel ethanol. Exports to the European Union fell 42% to a 9-month low of 34.1 mg, though strong demand from the Netherlands continued to underpin the market for undenatured ethanol. Shipments to South Korea jumped 57% to a 4-year high of 16.4 mg, while imports by the Philippines retreated 27% to 11.1 mg. Collectively, these four markets accounted for roughly three-quarters of all U.S. ethanol exports in April, the RFA said.
Rains not denting wheat quality: Frequent rains in the Plains and Midwest haven’t posed a serious threat to the quality of the soft red or hard red winter wheat crops, but that could change, said Drew Lerner of World Weather Inc. in a Sunday note. The high frequency of rain, wet field conditions, high humidity and milder temperatures coming up in the next week warranted monitoring. “Drier and warmer weather is always best for maturing small grains to protect them from a grain quality decline. Weather conditions in the next couple of weeks will be closely monitored, but as of today the quality of this year’s crops has not likely been seriously impacted outside of a few mid-south production areas,” he wrote.
India looks to boost fertilizer subsidy fund: India’s fertilizer ministry is looking to double its budgeted subsidy fund for the current fiscal year amid a global price rally, Reuters reported, as the South Asian nation increasingly counts the mounting cost of the Iran war. India, where agriculture is a mainstay of the national economy, imports fertilizers, including urea and DAP, as well as liquefied natural gas, a key feedstock for urea production.
Taiwan lawmakers spar: An intense debate has erupted in Taiwan’s legislature over a proposed 12-fold increase in funding next year for a defense-planning program with the U.S., the South China Morning Post reported. At issue is the Joint Force Design (JFD) program, which the report described as a bilateral defense planning mechanism used to assess the island’s military requirements, operational concepts and capability gaps. Findings for the JFD, formally known as the Taiwan-US Defence Department Cooperative Assessment Project, help shape force planning, military exercises, weapons procurement priorities and US security assistance. The report said Taiwan’s defense ministry plans to allocate NT$471.2 million (US$14.9 million) to the program between 2026 and 2028, including NT$152.5 million next year alone, marking a steep rise from previous years.
U.S. jet-fuel production jumps: Weekly estimates suggest U.S. jet fuel production has increased to record highs in response to elevated jet fuel prices after the Strait of Hormuz closed on February 28, the Energy Information Administration said in a report this week Higher crude oil prices and supply concerns, particularly in Europe and Asia, which previously imported much of their jet fuel supply from the Persian Gulf, have driven up jet fuel prices. Much of the increased U.S. jet fuel production is being exported, as domestic inventories remain above average, the report said.
U.S. jet fuel production has increased since February 28 when the four-week average production was 1.7 million barrels per day (b/d). In the week ending May 1, the four-week average estimate of U.S. jet fuel production surpassed 2.0 million b/d for the first time on record. The increased production reflects both above-average refinery runs and strategic shifts to increase jet fuel yields. U.S. refiners have been maximizing jet fuel production to take advantage of high jet fuel prices and margins. From March through May, U.S. Gulf Coast Jet Fuel Spot prices averaged $3.91 per gallon (gal), about double the price at the start of the year and higher than the regional spot prices for both gasoline and diesel fuel. The jet fuel crack spread on the U.S. Gulf Coast, an indicator of the profitability of refining crude oil into jet fuel in the region, averaged $1.25/gal in the same period, up from $0.42/gal at the start of the year.