US Heating Oil Holds Wide Premium Over Crude as Hormuz Inventory Drain Deepens
Heating oil at $4.06 a gallon against ICE Brent crude front-month at $88.10 a barrel reflects a product-crude premium that four weeks of accelerating US inventory draws have not closed.
Heating oil futures stood at $4.06 a gallon as of Friday's close (2026-07-18), while ICE Brent crude front-month held at $88.10 a barrel. The spread between crude and refined products, which Platts says normally runs at $1-2 per barrel, widened sharply in April 2026 amid fears of near-term shortages. It has not closed since.6
The disruption traces to military action on February 28 (2026-02-28), which preceded the de facto closure of the Strait of Hormuz, according to EIA quarterly data. Goldman Sachs estimated that tanker traffic through the lane had since fallen by roughly 90%, temporarily removing about 18% of global oil supply from the market.1,4
US inventory data shows the direction of pressure has not eased. EIA figures for the week ending June 25 (2026-06-25) showed a crude oil draw of 6.7 million barrels, leaving commercial stocks at 452.3 million barrels.2
At Cushing, Oklahoma (the delivery hub for NYMEX WTI crude front-month), stocks fell a further 1.5 million barrels in the same week to 40.3 million barrels. Bloomberg's estimates based on the same EIA data put the four-week rolling draw pace at 1.15 million barrels per day across all US crude inventories, including the Strategic Petroleum Reserve.2
A record export surge accelerated the drain. US crude oil and petroleum product exports reached 14.2 million barrels per day in the week of May 11 (2026-05-11), EIA data showed, 33% above the equivalent week in 2025. Total US stocks of crude and products, including the SPR, fell by roughly 24.1 million barrels that same week, one of the five largest weekly declines on record, Wood Mackenzie reported.3
Trump had noted weeks earlier that large numbers of empty tankers were heading to US ports to load crude and products. That fleet subsequently carried supply out, rerouting it around the disrupted Hormuz corridor while drawing down the onshore American inventories that feed domestic refinery runs.3
Refineries face a secondary squeeze. Neil Crosby of Sparta Commodities told the Economist that throughput had already been cut by over 3 million barrels a day, or 10% of combined capacity, with the potential to reach 5 million barrels per day in May and 10 million barrels per day in July if the strait stays shut. China holds approximately 1.3 billion barrels of crude in strategic reserves, the Economist reported, though whether Beijing would release any of that buffer on terms that ease product markets is a separate calculation.6
Goldman Sachs warned that oil markets could reach demand destruction territory if the Hormuz disruption continues. The bank separately raised its second-quarter 2026 forecast for ICE Endex TTF front-month gas to around $22 per MMBtu, citing impaired Qatari LNG exports through the same shipping lane. ICE Endex TTF front-month stood at €57.51 per MWh as of Thursday's close (2026-07-17), well below that forecast level.4
US shale output offers limited near-term relief. Ramping production takes 3-6 months and will probably yield only 300,000-700,000 barrels per day initially, the Economist reported. Morgan Stanley estimated that crude held in floating storage at sea had provided roughly 3 million barrels per day since early March (2026-03), a bridge supply drawing down rather than replenishing.5
NYMEX WTI crude front-month stood at $82.49 a barrel as of Friday's close (2026-07-18). With the four-week US crude draw pace running at 1.15 million barrels per day and shale ramp-up still months away, how quickly the floating crude buffer compresses will determine how much further the product-crude premium has room to widen.2,5