MARKETWIRE ALERTS

MARKETWIRE ALERTS 

MarketWire Afternoon News for March 2:

Updated at 5:00 PM ET 

HEADLINES:

— LA Jet Fuel Basis Spikes 13cts on ULSD Futures Rise

— Midwest ULSD Basis Widens as Futures Surge on Iran Risk

— PNW ULSD Basis Sinks 8cts on Lower Offers

— U.S. Rack ULSD Prices Rise 7.3cts Amid Iran War

— Analysis: U.S. Refiner Margins May Soar Amid Mideast War

— Brent-WTI Spread Hits 2022 High on Hormuz Strait Pause

— ISM: U.S. Manufacturing Expanded in Feb, PMI at 52.4

— Chronology: Oil Price Action Amid U.S.-Iran Nuclear Crisis

NEWS:

LA Jet Fuel Basis Spikes 13cts on ULSD Futures Rise

Basis for prompt Los Angeles Jet fuel surged by 13cts on Monday (3/2) to a 16cts premium over April NYMEX ULSD futures, following a rally in futures market.

The geopolitical risk stemming from the Middle East conflict put upward pressure on the front-month ULSD contract, which rose by 14% on the day. 

Domestic supply tightness also supported spot market prices as refining utilization in the West Coast (PADD 5) dropped to 81.1% in the week ending February 20 from 87.4% the prior week, according to most recent data from Energy Information Administration.

Declining refining rates in PADD 5 are related to the recent closure of Phillips 139,000 bpd Los Angeles, California, refinery and the upcoming shutdown of Valero’s 145,000 bpd, Benicia California, scheduled for late April.

Midwest ULSD Basis Widens as Futures Surge on Iran Risk

Midwest ULSD differentials widened sharply Monday after the April NYMEX ULSD futures contract saw the steepest increase of the session, rising by more than 14% as traders priced in heightened geopolitical risk tied to Iran and renewed concern over potential disruption to crude flows through the Strait of Hormuz.

The futures-led advance injected significant risk premium into distillates, lifting flat price levels across the complex and pressuring regional cash markets to adjust.

According to DTN data, Group 3 ULSD weakened 9.25cts on the session to a 22cts discount to April NYMEX ULSD futures. Chicago ULSD declined 6cts to a 7cts discount, leaving Group 3 at a 15cts discount to Chicago.

The widening discounts reflect a sharp rise in flat price rather than a sudden deterioration in Midwest supply fundamentals. When futures advance aggressively, rack markets often recalibrate by deepening discounts as buyers hesitate at elevated replacement costs and spot liquidity temporarily slows.

PADD 2 remains insulated from direct crude supply disruption given its reliance on Canadian and domestic pipeline flows. However, global diesel balances are more sensitive to geopolitical risk. Any sustained threat to Middle East export routes would tighten the Atlantic Basin distillate market and could eventually lend support to inland pricing if Gulf Coast values strengthen and pull barrels outward.

“This is a futures-driven move,” a source familiar with the Midwest market said. “If the Gulf firms and export demand builds, basis will follow. Until then, the cash market is just adjusting to the higher flat price.”

Market participants will continue monitoring whether geopolitical tension translates into sustained physical tightening or remains confined to risk premium embedded in futures contracts.

PNW ULSD Basis Sinks 8cts on Lower Offers

Pacific Northwest ultra-low sulfur diesel (ULSD) basis plunged on Monday (3/2), slipping by 8cts to a 3.5cts premium to April NYMEX ULSD futures contract after lower offers at that level were heard in the spot market.

Market sources said an offer for PNW ULSD was heard last at a 4cts premium over the same benchmark, but deals were in that range were not confirmed at the time of publication.

The PNW ULSD premium to the front-month NYMEX ULSD futures contract narrowed Monday after the benchmark rose over 14% on the day. The sharp increase was driven by escalating global supply concerns following the outbreak of military strikes between the United States-Israel and Iran over the weekend. 

U.S. Rack ULSD Prices Rise 7.3cts Amid Iran War

Wholesale rack prices for gasoline and diesel across the United States opened higher on Monday due to supply tightness expectations as geopolitical tensions increase in the Middle East, following military strikes from U.S. and Iran over the weekend.

Nationwide ultra-low sulfur diesel (ULSD) rack prices were at $2.7360 gallon, up 7.3cts from Friday’s $2.6630 gallon, according to DTN data.

 Meanwhile, conventional unleaded gasoline rack prices were heard at an average of $2.4222 gallon, an increase of 1.7cts compared to Friday’s implied national average of $2.4052 gallon.

On gasoline racks, PADD 3 posted the largest increase, rising 4.86cts to $2.0249 gallon, followed by PADD 2, up 4.03cts to $1.9740 gallon. PADD 4 increased 2.37cts to $2.0475 gallon, while PADD 5 edged up 0.39cts to $2.8377 gallon. In contrast, PADD 1 declined 3.01cts to $2.0443 gallon, the same data showed.

Compared to the national average of $2.4222 gallon, all regions traded at a discount except for PADD 5, which stood at a 41.55cts premium to the U.S. average. The widest discount was seen in PADD 2, at 44.82cts below the national benchmark, followed by PADD 3 at a 39.73cts discount, PADD 4 at 37.47cts below, and PADD 1 at a 37.79cts discount.

ULSD racks also moved higher across all five PADDs, with the sharpest increase seen in PADD 1, where ULSD rose 8.98cts to $2.7913 gallon, followed by PADD 5, up 7.02cts to $3.1886 gallon. PADD 3 climbed 6.91cts to $2.6076 gallon, while PADD 4 and PADD 2 rose 4.75cts and 4.63cts, respectively.

Relative to the national ULSD rack average of $2.7360 gallon, PADD 5 held the strongest premium at 45.26cts above the U.S. average, while PADD 1 traded at a 5.53cts premium. The PADDs 2,3 and 4 were at 6.97cts, 12.84cts and 17.26cts below the national average in that order.

The front-month NYMEX ULSD futures contract rose by  $0.2982 to $2.8942 gallon, while the NYMEX RBOB for April delivery increased by $0.0839 to $2.3694, while the two crude benchmarks Brent and WTI rose over 6% from Friday.

Analysis: U.S. Refiner Margins May Soar Amid Mideast War

Higher margins may be in order for U.S. refiners as a pause in the Middle East’s oil supply artery leaves oil and product prices with their largest one-day jump since the Russian invasion of Ukraine four years ago.

U.S. refiners don’t just run crude; they buy secondary feedstocks like Vacuum Gas Oil (VGO) to feed their crackers. Much of the world’s merchant VGO comes from the Middle East.

Prolonged crude supply outages may force U.S. refiners to source part of their diet elsewhere, but the ongoing situation also means higher margins. The world’s middle distillate supply, already relatively tight, may be equally as affected by the war as crude.

The Middle East’s supply constraints extend far beyond the 3.2 million bpd of crude and condensate Iran produces. While OPEC sits on enough spare capacity to compensate for Iranian oil, most must still transit the Strait of Hormuz.

Following Iranian attacks on ships, tanker traffic through the Strait has ceased almost entirely. This narrow waterway is the largest chokepoint for global oil flows, handling 15 million bpd of crude and 5 million bpd of petroleum products.

Saudi Arabia alone produces some 2.7 million bpd of refined products, including 1.2 million bpd of diesel, exports of which rely heavily on the strait.

Pause of activity on the waterway effectively starves U.S. Gulf Coast (USGC) secondary units of the intermediate feedstocks needed to maximize gasoline and diesel yields.

Expanding Margins

Fuel prices surged alongside crude in response to the crisis, propelling refining margins higher. Consequently, the 3:2:1 crack spread used by U.S. refiners surpassed the 18-month highs reached in November when diesel prices rallied globally.

Refined product supply was further jeopardized by an Iranian drone attack on Sunday. The strike forced shut operations at Ras Tanura, Saudi Arabia’s largest refinery and a main diesel supplier to Europe.

U.S. refiners are in prime position to fill part of this gap, but current physical capacity constraints limit that potential. March is a peak period for planned refinery turnarounds as plants transition to summer-grade gasoline.

The price spike is hitting exactly when several major USGC plants are offline for maintenance. This seasonal downtime restricts the ability of domestic refiners to immediately increase throughput to meet the global shortfall.

While domestic dependence on Middle Eastern crude has waned, the U.S. still imports more than 500,000 bpd from the region. Heavy-sour crude from Canada and Venezuela can step in to replace grades like Arab Heavy.

Lighter grades are not in short supply given record domestic production and projects in Guyana and the North Sea. However, East Coast refiners may face higher freight costs to secure these alternative supplies.

Furthermore, the Jones Act limits the flexibility of moving USGC light sweet crude to Northeast refineries to replace Mideast imports. This regulatory hurdle complicates the domestic effort to balance internal demand during the crisis.

The duration of oil supply outages will determine if the current price action is a temporary spike or the harbinger of $100 bbl oil. Additional risk to diesel supply could easily propel margins past the multi-year record highs.

Brent-WTI Spread Hits 2022 High on Hormuz Strait Pause

The spread between global crude benchmarks Brent and WTI widened to its highest in almost four years on Monday (3/2) amid price volatility caused by heightened military activity across the Middle East and OPEC’s intervention to provide a supply cushion.

Crude and product futures skyrocketed as much as 12% Monday (3/2) as U.S.-Israeli air strikes pounded Iran and Tehran responded by firing missiles at neighboring capitals in the region. Prices also surged as tanker traffic through the Strait of Hormuz, which straddles Iran and serves as passage to about 20% of world petroleum cargoes, ground to a virtual standstill.

ICE Brent crude for May delivery surged to $82.37 bbl, its highest since a January 2025 peak of $82.63, as Iranian missiles and drones directly targeted civilian and economic hubs including Dubai, Abu Dhabi, Manama, Doha and Kuwait City. The U.S.-Israeli campaign had earlier killed 48 senior Iranian leaders, including the country’s Supreme Leader Ayatollah Ali Khamenei. Brent retraced its peaks later, touching a session low of $75.75 bbl.

NYMEX WTI for April delivery hit a nine-month high of $75.33 bbl before retreating to $69.20 at the lows.

The price action widened the Brent-WTI spread to $7 bbl, compared to the $5.80 level recorded Friday (2/27) and the $6 average so far this year.

It essentially matched the spread from nearly four years ago, when Brent and WTI stood apart by $7 bbl in May 2022, in the aftermath of Russian’s invasion of Ukraine that began in February that year. In July 2022, the spread widened to around $13 on supply shocks caused by sanctions imposed on Russian oil pursuant to the invasion.

Prior to the Iran and Ukraine crises, the highest the spread had gotten was in September 2011, when the gap reached nearly $30 bbl as the U.S. shale revolution then produced crude faster than the existing pipeline infrastructure could move it from the Cushing, Oklahoma hub to Gulf Coast refineries.

Monday’s widening of the spread was driven by Brent’s heavier exposure to sea-borne disruption in the Hormuz, underscoring the market’s immediate fear as the world’s most vital oil artery remains effectively closed to maritime commerce. WTI, meanwhile, was supported by steady domestic demand and the role of U.S. exports as a safety valve for global markets.

The rally this morning was the largest single-day surge in oil prices since the onset of the Russia-Ukraine conflict four years ago.

The Organization of the Petroleum Exporting Countries (OPEC) contributed to the market’s retreat later by pledging to raise production.

OPEC and its allies, known as OPEC+, agreed Sunday (3/1) to increase production by 206,000 bpd in April, signaling a strategic end to the output pause held during the first quarter.

U.S.-Israeli strikes against Iran initially triggered a rush for long positions, with the fear of a potential 1.6-million bpd export disruption from Iran driving the upside. Iran exports nearly 80%-90% of its total international sales to China.

While Iran’s total production is roughly 3.3 million bpd, nearly half is consumed by domestic refineries to meet internal demand. The 1.6 million-bpd entering the global market is what speculators fear could be knocked offline by direct hits or a blockade to Hormuz.

While global inventories offer a temporary supply cushion, analysts warn that spare production capacity cannot bridge the sizable supply deficit caused by a sustained blockade of the strait.

“Some 15 million bpd of crude oil and 5 million bpd of petroleum products transit the narrow passageway daily, and options to reroute oil flows to ports not in the Persian Gulf, like Saudi-Arabia’s East-West pipeline which connects production to the Red Sea, are severely limited,” DTN analyst Karim Bastati said.

ISM: U.S. Manufacturing Expanded in Feb, PMI at 52.4

A key U.S. purchasing managers index released on Monday (3/2) showed that manufacturing activity in February expanded for the second time in a row.

The Manufacturing Purchasing Managers Index of the Institute for Supply Management (ISM) stood at 52.4 in February, down from 52.6 recorded in January, which was the highest reading since August 2022. The two-month increase followed four months of decline and marked the first time since February 2025 that the reading was above the 50-point mark that separates the positive and negative constituencies for the index. Still, ISM in its report highlighted that the expansion in February was the only third in 40 months.

The rise in U.S. manufacturing activity was attributed, in part, to growth in new orders and production. The associated indices edged lower from January but remained in expansion territory for the second and fourth consecutive months, respectively. The Supplier Deliveries Index improved from January for the third month in a row.

“In February, U.S. manufacturing activity remained in expansion territory, although growing at a slower pace than the month before. Of the five subindexes that make up the PMI, two indicated slower growth compared to the previous month, and the Employment and Inventories indexes remained in contraction” Susan Spence said, chair of the ISM Manufacturing Business Survey Committee.

Twelve manufacturing industries reported growth in February. Petroleum and coal products were among the five manufacturing industries surveyed reporting contraction.

Survey respondents commented on the strain tariffs that were put on input prices. The Prices Index, in expansion territory for the last 17 months, jumped 11.5 points from January to 70.5, the highest reading since June 2022.

The U.S. dollar index reacted little to the release of the data and at 98.420 against a basket of foreign currencies was up 0.85 points on the day.

Chronology: Oil Price Action Amid U.S.-Iran Nuclear Crisis

The following is a chronological timeline of the start and end of nuclear talks this year between the U.S. and Iran and the subsequent military escalation that has driven global crude benchmarks to 14-month peaks:

• Feb. 17, 2026: Indirect nuclear talks in Geneva conclude without a deal. Markets begin pricing in a “diplomatic failure” premium as rhetoric from both Washington and Tehran sharpens.
  • Brent: $68.40 bbl | WTI: $63.10 bbl
• Feb. 24, 2026: Tensions spike as a U.S. Navy fighter shoots down an Iranian drone near the USS Abraham Lincoln. Prices edge higher on the increased military footprint and a breakdown in earlier “guiding principles.”
  • Brent: $70.15 bbl | WTI: $65.40 bbl
• Feb. 26, 2026: A third round of talks in Geneva ends in a stalemate over uranium enrichment. Crude futures whipsaw as the U.S. sets a one-week deadline for a deal while assembling a massive naval force.
  • Brent: $72.50 bbl | WTI: $67.80 bbl
• Feb. 27, 2026: President Trump expresses dissatisfaction with negotiations, signaling potential military action. The market settles with a heightened risk-on sentiment, closing the week at multi-month highs.
  • Brent: $73.10 bbl | WTI: $67.00 bbl
• Feb. 28, 2026 (Saturday): “Operation Epic Fury” commences. U.S.-Israel air strikes decapitate Iranian leadership and target over 500 military and nuclear sites across the country.
  • Market Status: Weekend Close
• March 1, 2026 (Sunday): Iran retaliates with drone and missile strikes on Gulf hubs. OPEC+ agrees to a 206,000 bpd production hike for April to stabilize the global supply chain.
  • Market Status: Weekend Close
• March 2, 2026 (Monday Opening): Crude benchmarks surge at the open as tanker traffic through the Strait of Hormuz ceases almost entirely. Brent and WTI both surged 12% or more at the session highs.
  • Brent: $82.37 bbl (14-month peak) | WTI: $75.33 bbl (nine-month peak)
• March 2, 2026 (Monday Session): Prices consolidate as traders weigh the modest OPEC+ hike against the risk of a sustained Hormuz blockade.
  • Brent: $75.75 bbl (session low) | WTI: $69.20 bbl (session low)