Disclaimer: This article is written by Mohammed Imran, research analyst, Mirae Asset Sharekhan. Views expressed are his own. Readers' discretion is advised. The global crude oil prices stays higher after US president rejects the latest Iranian proposal through mediator with both side holding on to their stern demand, the standoff keeps risk premiums embedded in the prices which has kept dated Brent prices holding around $120/b, while Brent futures are holding in the range of $100-105. US negotiators are pressing Iran to make concessions on its nuclear program to revive the peace talks and placate President Trump on an issue he has made a top priority. The positive news for global markets is that crude oil flows from Strait of Hormuz have increased to average above 10 mbpd as per the shipping tanker tracker data, that would see oil making sharper corrections if US-Iran signals any negotiations ahead of the US-Midterm election. Petroleum products to remain in bottleneck The world is facing acute shortages of petroleum products due ongoing war between Ukraine-Russia and Iran-US, that has pulled world crude oil processing down by 3.5-4 million barrels per day. The continued attack of Ukraine on Russia saw their refining output falling to 2.5 mbpd in August down from 5.5mbpd in 2025. While Saudi Arbia refining units are heavily impacted by Houthis recent attacks, all this has led to higher gasoline in diesel prices in European Union which directly were depending on the clean products on these two sources. US energy producers capitalised on the higher crack spreads in Europe and have exported to maximum capacity this summer but this had led to shortage of diesel in the domestic markets which turned hole into the pockets of US consumer at pump stations as prices surged to $6.5/g from the pre-war level of around $3-3.5/g.
US diesel export ban could benefit India US diesel prices at $6.5/g have intensified White House pressure to curb exports and lower domestic prices ahead of the mid-term elections. However, restricting diesel exports could reduce gasoline output and lift gasoline prices. President Donald Trump acknowledged this trade-off, saying he was considering a diesel export ban “very seriously,” but warning that it “can oftentimes lead to a little bit of an increase on gasoline for cars.” The US is the world’s largest diesel exporter, supplying 20 per cent of global export demand. US exports surged after damage to Russian and Saudi Arabian energy infrastructure; together, those countries previously met 18 per cent of world demand. Even a temporary suspension of US diesel exports would reverberate globally. Europe and South/Central America would seek replacement cargoes mainly from India, Singapore, South Korea and possibly China, increasing demand and prices in an already tight market. Australia, which has limited domestic refining capacity, imports about 550,000 b/d of diesel, primarily from South Korea, Singapore and Taiwan. India has exported 1 mbpd of refined products in FY27, with middle distillates contributing 50 per cent, where spreads are strongest. Kpler’s September data show Russian crude imports near 1.8 mbpd, while the shares of Middle Eastern and African shipments have risen significantly; total Indian crude imports average about 5.4 mbpd. Strong spreads and greater Middle Eastern crude availability over the past six months, following increased oil flows, should enable Indian refiners to monetise the opportunity through higher product exports. US weekly inventories US reserves are depleted at astonishing rate this year, the gasoline inventories were -5.6 per cent below the seasonal 5-year average, distillate inventories were -11.9 per cent and the SPR reserves are at 283 million barrels lowest since 1983. Outlook As the US midterm elections approach, oil volatility will rise with US–Iran negotiation headlines, rumours and unconfirmed reports. Improving oil flows and better global supply than six weeks ago could unwind risk premiums, pulling prices 10–15 per cent below current levels. Brent futures would reach $115–120/b only if the US and Iran seriously escalate tensions in the Strait of Hormuz, particularly through attacks on ships. We expect oil prices to moderate in coming weeks, although supply bottlenecks should keep gasoline and distillate prices elevated in Europe and other import-dependent markets.
 "Higher outflow from Hormuz could unwind premiums; oil may correct by 10-15%")
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