The Wrong Hedge

The distillate superspike

There is a table making the rounds among commodity desks right now. It shows distillate prices — jet fuel, gasoil, marine fuels — benchmarked against three reference dates: the pre-conflict warning period in July 2025, the escalation phase in January 2026, and the day the shooting started on February 28. Against each of those anchors, it then shows where prices sat on March 17, 2026.

The numbers are violent. NWE jet fuel cargoes: up 103% versus the day war started. Singapore 10ppm gasoil: up 111.6% in the same window. Fujairah 380 cSt bunker fuel: up 120.9%. These are not rounding errors. They are a structural repricing of the distillate complex, and to understand why it happened — and where it goes from here — you need to go back to some very basic oil market mechanics that most commentary simply skips over.

I’ve been rereading Morgan Downey’s Oil 101 alongside this table, and the combination is clarifying. This book was written in 2009, but its physics doesn’t date. Let me use it as a frame.