Fuel Prices Up 20-40 Cents following President’s Speech, Continued Operations

At a Glance Summary: Fuel prices are up across the board: diesel +40¢, gasoline +20¢, crude up ~$8. Trump confirmed another two to three weeks of military action, while Houthi threats to the Bab el-Mandeb Strait risk broadening the conflict. The last pre-conflict tanker shipments are finishing their voyages, accelerating global inventory drawdowns in April. Russian exports are down about 20% due to Ukrainian attacks. OPEC+ is considering a production increase, but it will offer only limited relief until the Strait of Hormuz reopens.

Energy markets opened higher following a wave of overnight developments tied to the Iran conflict and President Donald Trump's latest address. Diesel prices surged by 40 cents, gasoline climbed 20 cents, and WTI crude jumped $8, with prompt futures trading up by as much as $9.50/bbl at times. Crude is on track to gain roughly $10 per barrel week-over-week, reversing earlier losses and pushing prices back toward recent highs.

The rally followed President Trump's speech last night, where he confirmed that U.S. military operations against Iran will continue for the next two to three weeks. While describing the campaign as "very close" to completion, he also emphasized that more aggressive action is expected in the interim. Trump did not provide a timeline for reopening the Strait of Hormuz, a key concern for energy markets, and reiterated that any ceasefire discussions would depend on the waterway being "open, free, and clear." Additional comments underscored continued military pressure, stating that operations will intensify before any resolution is reached.

Iran signaled that the Strait of Hormuz remains firmly under its control and will not be reopened under current conditions. At the same time, countries across Asia have begun negotiating directly with Iran to secure safe passage for their tankers. Beyond Hormuz, risks are expanding. Yemen's Houthi forces warned they could move to disrupt the Bab el-Mandeb Strait if the conflict broadens, introducing another potential choke point for global oil flows.

Supply pressures are expected to intensify in the coming weeks. Typical oil tanker shipments from the Gulf take 15-35 days to reach their destination, so the last shipments sent out pre-conflict are now offloading. With no re-supply in sight, expect physical markets to tighten rapidly, especially in Asian markets. The International Energy Agency warned that oil supply losses tied to the conflict will increase in April compared to March, as disruptions continue across the region. At the same time, Russia extended its gasoline export ban through July 31, further tightening global product availability. In Asia, China has directed refiners to maintain fuel production levels to avoid shortages

Physical risks to infrastructure and shipping remain elevated. A UAE-owned product tanker was struck by drones off the coast of Qatar yesterday, though it was not carrying oil at the time and the resulting fire was brought under control. The incident highlights the growing threat to vessels operating near key transit routes, even when not actively transporting cargo. Meanwhile, diplomatic efforts are beginning to take shape, with multiple countries exploring coordinated actions to restore navigation through critical waterways, even as military activity continues.

Russia Adds to Global Supply Strain

Outside the Middle East, additional pressure is building from Russia's energy system. Recent drone attacks on Russian export infrastructure have reduced the country's oil export capacity by roughly 1 million barrels per day, or about 20% of total capacity. Key export routes, including major Baltic ports, have been disrupted, creating bottlenecks in the pipeline system and forcing storage levels higher.

With limited ability to move crude to market, some producers are expected to scale back output to avoid overwhelming the system. These disruptions come at a time when global supply is already constrained, adding another layer of pressure to oil markets. Even as Russia has benefited from higher prices, reduced export capacity is tightening overall availability and contributing to the broader supply imbalance.

OPEC+ Signals Readiness Amid Supply Disruptions

OPEC+ is also stepping into focus as markets look for additional supply signals. The group is expected to weigh a potential output increase at its upcoming meeting, following a previously announced production boost of 206,000 barrels per day for April. The move would position key producers to respond quickly if flows through the Strait of Hormuz resume.

However, any increase may have limited immediate impact. The effective closure of the Strait has already forced major producers such as Saudi Arabia, Iraq, Kuwait, and the UAE to cut output, as shipments cannot move through traditional routes and storage tanks are effectively filled to capacity. While some exports are being rerouted through alternative pathways, overall flexibility remains constrained.