Fossil diesel prices have snapped higher as the conflict around the Strait of Hormuz reignited, pulling the reference gasoil contract up while biodiesel itself drifted lower.
Low sulphur gasoil (LSGO) firmed 21.4% to $1,134/mt on 14 July, from $934/mt a month earlier. The June ceasefire between the US and Iran had briefly calmed oil markets, but hostilities resumed in mid-July: Iran attacked shipping in the Strait of Hormuz, the US responded with strikes, and a reinstated naval blockade has cut Hormuz traffic by more than half week-on-week.
Biodiesel moved the other way. FOB ARA FAME 0 eased around half a percent, UCOME slipped 0.7%, and FAME -10 fell 2.6%. Renewable diesel (HVO) dropped more sharply, with HVO from used cooking oil down 5.6% and tallow-based HVO down 6.9%, while vegetable-based HVO held roughly flat.
The policy calendar was busy. On 10 July the European Parliament rejected the Commission’s move to class soybean oil as a high indirect land-use change (ILUC) risk feedstock under RED III. The vote protects the EU soy value chain, but Vesper notes it could expose the bloc to retaliation from Indonesia and Malaysia over the parallel failure to reclassify palm oil. Portugal cleared a decree lifting its maximum biodiesel blend from 7% to 10%, and the US EPA finalised its Renewable Fuel Standard mandates for 2026 and 2027, the highest volumes in the programme’s history.
On feedstock, used cooking oil flows are shifting. EU UCO imports fell 4.9% in the first half against a year earlier, while China’s UCO exports jumped 30.1% through May. US UCO imports remain down 58.2% year-to-date on tariffs against Chinese product, though April marked the first monthly year-on-year rise since those tariffs took hold.
The split between a firming fossil reference and easing biodiesel is the tension running through the complex now.
Read the full biodiesel analysis on: https://app.vespertool.com/market-analysis/3219?commodity=vegetable-oil
