US offers emergency heating oil loan as winter fuel costs surge

The US Department of Energy is offering to loan up to 315,000 barrels from the Northeast Home Heating Oil Reserve, with deliveries scheduled to be completed by Nov. 13, as distillate markets face elevated prices ahead of winter, the agency announced Oct. 21.

The offer would cover supplies in Maine, Massachusetts and Connecticut and represent nearly one-third of the 1 million-barrel NHHOR emergency stockpile. In an email, a DOE spokesperson did not comment on the potential for additional future releases. The measure is "structured to mitigate supply chain challenges disrupting fuel oil supply," DOE wrote in its release.

"The Trump Administration is committed to doing everything in our power to lower energy costs for the American people," US Energy Secretary Chris Wright said in a statement.

The heating oil offer follows DOE's September solicitation for an exchange of up to 40 million barrels of sour crude from the US Strategic Petroleum Reserve, part of a US commitment to release 172 million barrels under the International Energy Agency's coordinated emergency stock release announced in March, shortly after the US-Israel war on Iran disrupted Middle East trade flows and roiled global energy markets.

Under SPR exchanges, companies may borrow crude and subsequently return the volume along with additional barrels as a premium, rather than purchasing the oil outright. On Sept. 23, US Energy Secretary Chris Wright told a Dow Jones event the SPR would be refilled with "roughly 1.25 barrels" for every barrel it released during the 2026 exchanges.

DOE said the quantities available for exchange were a minimum of 25,000 barrels and a maximum of 30,000.

Distillate prices

The heating oil announcement comes as international efforts to increase diesel availability continue. IEA members plan to release more than 20 million barrels of diesel as soon as possible, Platts, part of S&P Global Energy, reported Oct. 15. The agency did not specify the timing or geographical distribution of those releases.

Platts assessed benchmark European diesel, ULSD 10ppm sulfur CIF Northwest Europe cargoes, at $1,470.5/mt Oct. 21, down from a high $1,642.25/mt Sept. 15. Platts Dated Brent was assessed at $118.13/b Oct. 21.

US retail diesel prices averaged $6.276/gal Oct. 19, up 9.7 cents/gal from the previous week and $2.656/gal from a year earlier, according to the US Energy Information Administration. New England diesel averaged $6.470/gal, up 2.9 cents/gal on the week.

The IEA said in its October oil market report that global diesel exports in September were 700,000 b/d below year-earlier levels. Reduced Russian and Middle Eastern shipments were only partly offset by increased supplies elsewhere, as prolonged disruptions prompted counter-seasonal inventory draws ahead of autumn refinery maintenance and peak winter demand.

"Of course, this is a temporary measure to solve a temporary supply disruption," Wright said in a statement. "I encourage the governors of New York and New England to work with the Trump Administration to build the Constitution Pipeline and replace home heating oil with low-cost natural gas."

On Oct. 19, Wright unveiled DOE plans to spend up to $42 million in Defense Production Act funding to support Williams Cos. Inc.'s Constitution Pipeline project, a 125-mile pipeline that would move gas from production areas in Susquehanna County, Pennsylvania, to an interconnect with Iroquois Gas Transmission in Schoharie County, New York.