Week in Review – Oil Above $100 as Hormuz Disruption Tightens Supply

It's been another wild week for oil markets, with WTI crude prices once again rocketing above $100/bbl - and even surpassing $110 for the first time since 2022. Although the market is closed today for the holiday weekend, there's still plenty of news and updates driving sentiment.

Shipping journeys that left the Strait of Hormuz before Feb 28 are now nearly all complete, meaning markets no longer have oil flowing in and must rely more exclusively on inventories. That strategy will only work for so long before inventories reach critical levels, at which point prices will jump even higher than current levels. Without a near-term reopening of the Strait of Hormuz, markets such as Asia and Europe could begin to see true physical supply shortages in the coming weeks and months.

Markets are reacting not just to current supply losses, but to uncertainty around how and when flows could resume. Comments from Donald Trump suggesting the U.S. could reopen the Strait with more time have done little to ease concerns, as the conflict continues to escalate with no clear resolution timeline. At the same time, infrastructure risks are rising, with reported attacks on energy and utility facilities in the region adding another layer of disruption. As a result, oil prices climbed sharply, with Brent crude gaining approximately 8% in a single session.

The impact is extending well beyond crude markets. Rising oil prices are feeding directly into inflation expectations, with gasoline prices in the U.S. moving above $4 per gallon for the first time in over three years. The upcoming March CPI report is expected to reflect this shift, with early estimates pointing to a 0.9% monthly increase, largely driven by higher energy costs. Markets are increasingly anchored to oil price movements, with inflation, bond markets, and broader economic expectations all tied closely to energy trends.

While equity markets showed some resilience this week, breaking a five-week losing streak, the broader outlook remains uncertain. The S&P 500 is still down from its early-year highs, weighed by both geopolitical risks and elevated energy costs. At the same time, economic signals are mixed - job growth rebounded in March, but underlying labor market conditions remain fragile, and economists expect the full impact of the conflict to emerge in the coming months.

Impacts on DEF

Global DEF pricing is moving higher as supply pressures intensify across the urea market. In March, the closure of the Strait of Hormuz and strikes on key oil and gas infrastructure disrupted a critical portion of global supply. These events have constrained natural gas production, the primary feedstock for urea and DEF, while also limiting exports from the region. At the same time, additional pressure has emerged from fertilizer export restrictions in China and Indonesia, further tightening global availability and pushing both urea and diesel prices higher across major markets.

While North America continues to operate domestic urea production at high capacity, it remains reliant on imports to meet total demand, especially during peak seasonal periods. With approximately 25% to 30% of globally traded urea originating from the Arab Gulf, current disruptions are impacting multiple key producers simultaneously, making the supply gap more difficult to offset. As a result, urea availability remains constrained, and supply is expected to stay tight throughout 2026.

These dynamics are now directly reflected in DEF pricing. NOLA FOB urea prices increased from $460-$480 per ton at the end of February to $670-$705 per ton by late March, a 46% rise. Monthly averages followed a similar trend, climbing from $449.25 per ton in February to $598 per ton in March. This increase has translated into DEF prices rising by over 20 cents per gallon. In addition, higher diesel prices have increased transportation costs, with fuel surcharge levels rising from 25% to 47%.

Changes in Regulations

Recent EPA's updates to diesel emissions regulations have sparked significant discussion across the industry, but the latest guidance provides a clearer picture of what has actually changed. The latest update removes the requirement for the DEF quality sensor and transitions monitoring to NOx-based verification, addressing known reliability issues tied to sensor failures. However, DEF fluid, SCR systems, and DPFs remain required, and emissions standards have not been weakened or removed.

It also remains illegal to remove or bypass these systems, and existing regulations do not support claims suggesting otherwise. Policymakers have also indicated that enforcement changes do not alter these requirements. Civil penalties under the Clean Air Act remain in effect, including fines of up to $45,268 per noncompliant vehicle. FUELSNews will be providing more insights into regulatory updates for DEF in an article next week.

Prices in Review

Crude prices opened at $102.60 on Monday and rose to $105.07 on Tuesday, the highest settlement of the week. The market then pulled back to $101.72 on Wednesday and $98.92 on Thursday, the lowest level of the week. However, no trading session took place on Friday, with markets closing Thursday at $111.54. From Monday to the final close, crude prices increased by $8.94 per barrel, representing an overall 8.7% gain.

Diesel prices moved lower through most of the week before a late rebound. Prices opened at $4.6020 on Monday and declined to $4.4679 on Tuesday, then fell further to $4.1240 on Wednesday and $4.0343 on Thursday, the lowest level of the week. After popping back up to nearly $4.60 during Thursday's trading session, markets closed at $4.3611, with diesel prices decreasing by $0.2409 per gallon, representing an overall 5.2% decline for the week.

Gasoline prices moved lower overall during the week after a brief early increase. Prices opened at $3.3160 on Monday and rose to $3.3990 on Tuesday, the highest level of the week. Prices then declined to $3.1877 on Wednesday and $3.0848 on Thursday, the lowest level of the week. No trading session took place today, with markets closing Thursday at $3.2880. No trading session took place on Friday, with markets closing Thursday at $3.2880. Over the week, gasoline prices decreased by $0.0280 per gallon, representing an overall 0.8% decline.