Trump’s ceasefire announcement takes effect but it will take time for this to really be seen in global diesel and jet pricing

Commentary summary:

• USGC ULSD arbs close into Europe. All arbs apart from USGC diesel arbs closed in Singapore.

• WCI ULSD LR2 arbs continue to point East. Whilst all Asian jet arbs remain closed into Europe and the US West Coast.

• All global diesel and jet spreads and cracks find a firm ceiling after Trump’s ceasefire announcement.

• Whether the ceasefire holds or not, it will take time to correct/repair the damage to diesel and jet infrastructure, stocks and supply chains. The outlooks remains bullish.

A tentative ceasefire announcement from the Trump administration has provided a brief moment of respite for global fuel markets, but traders would be unwise to mistake a pause in the fighting for a resolution to the supply crisis that has gripped diesel and jet markets for weeks.

May Singapore diesel spreads and cracks had been grinding relentlessly higher for much of the past week before hitting a firm ceiling in the past twenty-four hours, the immediate consequence of Washington’s announcement of a two-week halt to Middle East hostilities.

The May GO E/W told a similar story; having continued to climb, it has since retreated into negative territory. On paper, the numbers look like relief. In practice, the picture is considerably murkier.

Continuing strikes on Iranian infrastructure by US and Israeli forces, alongside retaliatory Iranian attacks on Gulf Cooperation Council facilities, cast serious doubt over the ceasefire’s durability.

Markets may have taken the headline at face value; the physical reality on the ground suggests considerably more caution is warranted.