Diesel Prices Surge as EU Tightens Russian Sanctions

Diesel futures are moving sharply higher this morning after news broke that Slovakia has rescinded its veto and the EU proceeded with its latest round of sanctions against Russia’s energy exports. The August heating oil contract is up over 12 cents (>5%) in pre-market trading this morning while its gasoline counterpart is up only 1.75 cents per gallon (<1%).

The new restrictions include a lowering of the price cap on Russian oil shipments (which has been largely shirked since its 2022 implementation) from $60 per barrel to ~$47.60, but left out critical details such as who would be enforcing the price cap internationally. Extra steps to curb Moscow’s use of its ‘shadow fleet’ were also taken: banning an additional 105 vessels from accessing EU ports and refusal of vessels that have transacted in waterborne ship-to-ship transfers. The new restrictions on Russian crude oil are largely symbolic and the futures market reflects that with WTI and Brent trading up a modest ~$1.25 per barrel.

Sanctions also banned all transactions related to both Nord Stream pipelines built to carry natural gas from Russia to Germany. Although Nord Stream 1 has been shut down since August 2022, and Nord Stream 2 never actually came online, the move to block financial activity surrounding the lines will likely have far-reaching impacts, especially with potential investors/partners that would otherwise have interest in restarting the lines once (if) the war in Ukraine is over.

Invest 93L drenched the Louisiana coastline yesterday, dumping over 2” of rain in some southwestern areas of the state. While some risks of flooding remain as the disturbance begins dissipating, for now it seems energy infrastructure in the state has survived unscathed.

RIN generation data published by the EIA effective June 10th, 2025, showed the credits generated by imported biomass-based diesel hit a new all-time low of just 128k credits last month, down from nearly 50 million a year ago. The drop doesn’t come as a surprise since the new Clean Fuels Production Credit (AKA 45Z) holds imported feedstocks ineligible for credit generation in order to prioritize domestic feedstock and RD production (AKA America First).