European diesel jumps over $100/mt amid Middle East tensions

European diesel futures rallied in the morning London trading March 2 as the market reacted to heightened tensions between the US and Iran.

The front-month ice low sulfur gasoil futures contract rose to $902.75/metric ton 0839 GMT, before retreating to $890.25/mt at 0924 GMT -- $147.50 above the Feb. 27 assessment of $752.75/mt, Platts and ICE data showed. The front-month ICE LSGO last rose to similar levels on Feb. 9, 2024, when Platts assessed it at $918.75/mt.

Diesel futures have been strengthening since the beginning of 2026 amid the developments in Venezuela and rising tensions in the Middle East, but the outbreak of hostilities on Feb. 27 appears to have exceeded market expectations.

In a note March 1, Erik Meyersson, chief EM strategist at SEB Research, described the escalation as a "maximalist scenario" in which the Iranian regime opted for a strategy of "destabilizing global markets as a last-ditch resort to try to pressure the US and Israel to cease attacks."

He added, "should the US Navy and allies fail to mount a proper defence of oil and gas facilities in the Gulf, that leaves room for even higher oil prices."

The news of smoke at Saudi Arabia's Ras Al Tanura refining complex, home to an oil terminal and 550,000 b/d refinery, boosted fears that oil infrastructure across the region could be damaged during the conflict, potentially reducing the supply of diesel/gasoil and jet fuel from the Middle East at a time when European refineries enter into the turnaround season.

In 2025, around 20% of European diesel and 50% of European jet fuel was loaded in the Persian Gulf -- demonstrating the reliance of the EU and the UK on imports from the region. This led to ICE LSGO outperforming crude oil futures in the European morning trading March 2, with diesel futures up around 17% from Feb. 27 close, but while the May Brent futures contract rose "only" around 8%, Platts and ICE data showed.