Geopolitical Events in the Middle East Raise Oil Product Prices

The latest escalation occurred after renewed military attacks in southern Iran and Iranian retaliations in the region, leading to the reintroduction of navigation restrictions through the Strait of Hormuz and the blockade of Iranian ports. This threatens two key maritime routes for transporting oil and oil products, which has already caused increased transportation and insurance costs, reduced availability of certain derivatives, and higher prices. Under normal circumstances, approximately 20 million barrels of oil and oil products are transported daily via this route, about one-fifth of the world's total consumption. In July, the Eurodiesel price with up to 10 ppm sulfur on the Mediterranean market reached $1,236.75 per ton, a daily increase of $33.75. Similar rises were observed in other relevant derivatives: unleaded gasoline increased by $11.75 per ton, and gas oil by $40.25 per ton. The diesel market is under particularly strong pressure due to combined effects of limited transport through the Strait of Hormuz, refinery supply issues, reduced processing, and limited global supply of middle distillates.