Brent and WTI futures remain below $100 a barrel on Tuesday morning, partly suppressed by governments releasing strategic oil reserves into global markets. But the more serious issue is building downstream, where the Russia-Ukraine war, strikes against energy infrastructure, and continued disruptions around the Strait of Hormuz are fueling the refined-products "perfect storm" we have repeatedly warned about.Oil extended gains this morning, with Brent trading around $91 a barrel after another vessel attack was reported near the Hormuz maritime chokepoint.
President Trump also said he had no interest in extending the interim peace agreement with Iran, which expired Monday.Diesel is now the biggest concern ahead of the Northern Hemisphere harvest. Rising fuel costs threaten to hit farmers, freight operators, and ultimately consumers through higher prices for food and goods.
JPMorgan penned a note last week warning that a global food crisis could erupt as soon as next year (read here).Back to diesel, the squeeze is being compounded by depleted inventories, with US diesel reserves near 23-year lows and European stockpiles approaching levels last seen during the 2022 energy crisis. A chart we published overnight went viral after showing the front-month US diesel crack spread (the NYMEX one-month heating-oil/WTI crack spread) hit a record $102 per barrel.
"This is absolutely unprecedented. The industrial economy either grinds to a halt, or consumers are about to be hit with the biggest energy pass-through in history," we noted.Diesel crack hits record $102.
This is absolutely unprecedented. Industrial economy either grinds to a halt or consumers about to be hit with the biggest energy pass through in history pic.twitter.
com/OtAdgrCvb3 — zerohedge (@zerohedge) August 17, 2026Several Wall Street desks have warned about the unfolding diesel crunch:Goldman's Daan Struyven Shows Global Diesel Exports CrashingCiti's Anthony Yuen Warns: Global Diesel Inventories "Below 5YR Minimum"BofA's Francisco Blanch Warns: "Diesel's Perfect Summer Storm" UnfoldingJefferies' Sam Burwell Warns: Hormuz Shock "Manifesting Itself In Cracks, Not Crude"Notably, diesel prices are rising far faster than crude. SPR releases may be suppressing crude prices right now, but they do little to resolve shortages of refined products. Instead, the releases are pushing emergency crude inventories, particularly in the US, toward dangerously low levels (the US SPR below 300 million barrels), while the downstream fuel shock continues to intensify - a perfect storm indeed.