The Wednesday HOT TAKE

The week kicked off with markets on edge as the Middle East conflict has done anything but de-escalate, leaving markets bouncing between strength in energy, broader economic worries, and concerns about the impact on U.S.–China relations.

In today’s update: what’s HOT, what’s NOT, and a quick nugget on Iran’s place in global ag markets.

3… 2… 1…

The Middle East conflict has sent heating oil to the moon — up 28% from Friday’s close and trading above $3.45/gallon today for the first time in more than three years.

Soybean oil is along for the ride, up 2.8% this week and pushing toward a 2½-year high near 64¢.

This week’s action has pushed heating oil’s year-to-date gains to 56% — far outpacing soybean oil, crude, and virtually every other commodity market.

Crude initially surged after U.S. and Israeli strikes on Iran, but refined products quickly took the lead as shipping through the Strait of Hormuz — responsible for ~20% of global oil and LNG flows — slows amid escalating attacks.

With distillate inventories already tight, tightening physical supplies and widening crack spreads have sent ULSD and heating oil racing ahead of crude, while gasoline prices have surged alongside them with the summer driving season right around the corner.