Oil: the risk remains in fuels

Oil: the risk remains in fuels

Awaiting the April EIA report: U.S. inventories decline, diesel under pressure, and gold supported by geopolitical risk.

Energy markets sit between official data and global tensions: the real imbalance is shifting from crude barrels to refined products.

On the eve of the new weekly update from the Energy Information Administration (EIA), the oil market appears in a complex phase, where physical fundamentals and geopolitical risk are increasingly intertwined.

The latest official data show a less reassuring picture than crude inventory levels alone might suggest. In the week ending April 10, U.S. commercial inventories fell to 463.8 million barrels (-0.9 million), while the drop was far more pronounced for refined products: gasoline down by 6.3 million barrels and distillates by 3.1 million. Refineries are operating at an 89.6% utilization rate, signaling still-solid demand against supply that struggles to expand quickly.

The key takeaway emerges here: the market is not short of oil in the strict sense, but it is increasingly short of fuels. Crude inventories remain slightly above the five-year average, while distillates are about 6% below it. Meanwhile, implied demand for petroleum products in the United States remains robust, exceeding 20 million barrels per day over the past four weeks.

The fuel bottleneck and the role of refineries

This divergence between crude and refined products is currently the main source of tension. Diesel, in particular, continues to show the greatest vulnerability, with significantly higher retail prices than gasoline and a more rigid market structure.

According to the EIA’s April Short-Term Energy Outlook, in 2026 the average WTI price is expected to be around $87 per barrel, while retail gasoline averages about $3.70 per gallon and diesel करीब $4.80. However, current levels remain higher, indicating that the market is still pricing in a significant risk premium.

Hormuz: the dominant geopolitical factor

The global context remains heavily influenced by the situation in the Strait of Hormuz, where restrictions on maritime traffic have affected a substantial share of global energy flows.

This is a strategic chokepoint through which about 20% of the world’s oil passes. Its partial closure has directly impacted transportation costs, the availability of barrels for Asia and Europe, and international price formation.

Not surprisingly, the spread between Brent and WTI has widened significantly in recent months, reflecting a tighter global market compared to North America. Brent, more exposed to geopolitical dynamics, continues to incorporate a higher premium than the U.S. benchmark.

Prices and market structure

Recent data show Brent around $98 per barrel and WTI near $86, while fuels remain elevated: gasoline above $4 per gallon and diesel above $5.5 in the United States.

At the same time, the futures curve shows strong backwardation—a typical sign of a market tight in the short term but less concerned about the long term. In other words, scarcity is perceived as immediate rather than structural.

Global demand and slowdown risk

On the macro front, the EIA has revised downward its global oil demand growth estimates for 2026 to about 0.6 million barrels per day. The expected slowdown, particularly in Asia, represents a balancing factor that could limit further sustained price increases.

The market therefore finds itself in a paradox: supply under pressure on one side, and demand beginning to feel the weight of the economic environment and high prices on the other.

Gold: a natural hedge against energy risk

In this scenario, gold continues to benefit from the combination of geopolitical risk and macroeconomic uncertainty. Prices remain elevated, with recent fixings close to $4,800–$4,900 per ounce.

More than a direct correlation with oil, the precious metal reflects the same risk matrix: global tensions, energy-driven inflation, and a search for defensive assets.

Conclusion

The upcoming EIA update will be a key step in assessing the short-term resilience of the energy system. More than crude inventories, three variables will be under scrutiny: fuel availability, refining capacity, and demand resilience.

As long as the Strait of Hormuz remains a source of instability, the market will continue to operate in a fragile balance. And while oil remains the barometer of the crisis, it is fuels—especially diesel—that measure its true depth.

In the short term, the risk is not just how much oil is available, but how quickly it can be refined and distributed. That is where the real pricing battle is being fought.