Diesel Prices Surge 53% in Week, Refiners Outpace S&P 500 ETF by 30 Points
Diesel futures have surged 53% in seven days, pushing the diesel crack spread to about $64 per barrel and helping major refiners outperform the S&P 500 ETF by over 30 percentage points year-to-date. At the same time, SPY tracked a 500-point Dow drop as oil prices spiked on U.S.-Iran tensions, underscoring elevated market volatility.
1. Diesel Market Shock
Ultra-low sulfur diesel futures climbed to roughly $4.00 per gallon, the highest since June 2022, marking a 53% rally in seven days. The rapid rise reflects a supply shock from Strait of Hormuz closures and inelastic freight and industrial demand.
2. Refiners Outperformance vs SPY
With diesel crack spreads near $64 per barrel—close to the October 2022 record of $83—Valero, Marathon and Phillips 66 margins have surged. An equally weighted basket of these refiners has outpaced the S&P 500 ETF by over 30 percentage points this year.
3. Market Selloff on U.S.-Iran Tensions
News of escalated U.S.-Iran conflict saw oil prices climb toward $102 per barrel, triggering a 500-point plunge in the Dow. SPY mirrored the decline as energy-related stocks and broader market sentiment turned risk-off.
4. Implications for SPY
Heightened energy costs and geopolitical risk could persistently widen equity volatility, pressuring SPY. Rising transportation and food costs may reignite inflation concerns and influence future Federal Reserve policy decisions.