The volatility follows a breakdown in diplomacy after the United States declined to extend a short-lived June ceasefire. Tensions reached a flashpoint when a senior Tehran official signaled readiness to escalate maneuvers within the Strait of Hormuz. Adding to the instability, President Trump threatened retaliatory measures against Oman should it finalize a joint management deal for the waterway with Iran.

Energy markets are reacting to more than just military posturing. The diesel crack spread has surpassed $100 per barrel, driven by a global supply shortage that has seen refinery throughput drop to 80.9 million barrels daily. Refiners, having prioritized jet fuel and gasoline production during the summer travel season, now face a severe diesel deficit. Compounding this, Russian export bans—instituted after Ukrainian drone strikes crippled domestic refining infrastructure—have removed a vital supply source from the global market, further tightening margins.