Crude has fallen back to where it sat before the Strait of Hormuz shut, but the world is still emptying its oil tanks faster than the recession is destroying demand, and the real shortage is now showing up in the products we actually burn.
🛢️ Brent crude is near US$72 a barrel, the lowest since late February just before the strait shut (⬇️ around 24% MoM)
🛢️ US commercial crude has drawn for nine weeks running, falling 6 to 8 million barrels almost every week through June (⬇️ 6.1 million in the week to 19 June, against an expected 4.5 million)
🛢️ Stocks now sit at 412 million barrels, around 7% below the five-year average and the lowest since January 2025
🛢️ Cushing, the key pricing hub, is down near 19 million barrels, the lowest since October 2014 and close to where the hub itself starts to malfunction
🛢️ Refining margins have blown out, with US diesel cracks near record levels around US$56 a barrel even as crude sank (⬆️ about 122% YoY)
🛢️ Domestic fuel excise relief unwinds in two steps, half on 1 July and the remainder plus CPI indexation on 1 August
The market is trading the peace deal as though the barrels are already back. The weekly data says they are not. US crude has drained 6 to 8 million barrels nearly every week through June, consistently deeper than expected, and the buffer is now visibly thin. Production is still running more than 11 million barrels a day below pre-conflict levels while the June quarter demand loss is closer to 5 million, and that gap is being filled straight out of tanks running down toward levels not seen in decades.
The flat crude price is the least useful number in the market right now, because the pressure has moved downstream into products and the crack spreads are shouting it. Even as crude fell, US diesel margins have held near record levels, more than double where they were a year ago, because the barrels genuinely left when Middle East refining went offline and Europe and Asia came looking elsewhere. US distillate stocks have dropped to their lowest since 2005, and American refiners are now shipping diesel to markets like Australia that would rarely touch their product. There is a fair counter, that refiners will lift runs to chase these margins and that some of the petrol crack is holiday-season froth, and cracks have eased from their spring peaks. But the diesel scarcity looks durable while the world stays short of Middle East product, and with crude already depressed the risk is skewed up rather than down.
For SME owners the read is straightforward. Some relief has arrived at the bowser as crude has come off, and it is worth banking while it lasts. Just do not build the year around it. Diesel, the fuel most small businesses actually run on, is being propped up by those record refining margins even as crude drops, so the relief there is thinner than the crude price suggests. With the excise stepping back up across July and August as well, the pump has more ways to rise than fall from here. Treat current pricing as a window rather than a floor and keep some flex in your margins in case it turns.