Commodity Tracker: 4 charts to watch this week

S&P Global Commodity Insights editors are closely monitoring Asian refiners as they reassess emergency crude reserves amid the Israel-Iran conflict. Egypt's domestic corn price surge could favor Black Sea supplies, while the US Environmental Protection Agency has released the proposal for new renewable volume obligations for 2026-27.

1. Asian refiners reassess emergency crude reserves amid rising geopolitical tensions

What's happening? Asian refiners are currently re-evaluating their emergency crude reserves in light of escalating geopolitical tensions in the Middle East. Following threats from Tehran to close the Strait of Hormuz after recent US strikes on Iranian nuclear facilities, refiners are considering precautionary measures to stockpile feedstock crude. However, unfavorable storage economics and the prevailing confidence in the stability of shipping flows from the Persian Gulf to Asia may limit these stockpiling efforts. Although US President Donald Trump stated that Israel and Iran have agreed to a ceasefire, geopolitical tensions and uncertainties regarding trade flows are expected to persist for many months, prompting Asian refiners to reassess the need to bolster their emergency crude reserves.

What's next? Escalating tensions may trigger military responses from East Asian nations, said traders, analysts, and refinery sources across Asia, as major economies in the region would be significantly impacted if sour crude flows were disrupted. Both Iran and Israel are likely to avoid harming commercial tankers bound for the Far East, recognizing that China, South Korea, and Japan all rank among the world's top 10 military powers, according to sources in Asia. The steep backwardation in the oil price structure could deter refiners from accumulating excess inventory, potentially leading to significant losses. A steep backwardation reflects expectations of weaker future prices, providing little incentive for refiners to store oil for later use.

Related topic: Israel-Iran Conflict

2. Surge in Egyptian domestic corn prices to favor Black Sea old crop

What's happening? Egypt's demand for processed corn products surged due to the weakening of the Egyptian pound against the US dollar amid the Iran-Israel war, raising domestic corn prices. The growth in demand for corn products and the positive margin for corn in the local market have created a need for corn, especially for near-term requirements. Domestic corn prices rose to Egyptian pounds 14,000/mt on June 20, up from Egyptian pounds 13,500/mt a week earlier.

What's next? The immediate requirement and the expectation of a further rise in corn prices are anticipated to favor Ukrainian corn for the leftover old crop. With South American corn expected to reach the Egyptian market by August, traders are looking to Ukraine as the next best alternative for immediate supply.

Related story: Egypt's domestic corn prices surge as demand rises amid weaker local currency

3. Long-awaited RVO bullish for RINs prices

What's happening? The US Environmental Protection Agency released the proposal for the renewable volume obligations for 2026-2027 on June 13, after months of delay. This proposal sharply increases the amount of biofuels US refiners must blend with gasoline and diesel and proposes to halve the value of imported biofuel and foreign feedstocks in the RINs market. D6 RINs, the most liquid RIN, settled at 120.50 cents/RIN on June 16, up 27.50 cents, or 29.6%, from June 12. That is the highest current-year D6 RINs level since Sept. 15, 2023, when it was assessed at 126.25 cents/RIN. The nature of the nested structure placed upward pressure on D4 RINs, up 28.5% in the same period of time.

What's next? RIN prices might continue to see upward pressure in the coming months as the proposed RVO was set above market expectations, and the proposal also includes 1/2 RIN for imported biofuels and foreign feedstock. Commodity Insights analysts forecast D6 RINs to reach 128 cents/RIN and D4 RINs to reach 139 cents/RIN in August 2026.

Related story: US EPA proposes aggressive new Renewable Fuel Standard volumes for 2026, 2027

4. Asian UCO hits 2-month high amid geopolitical tensions, rising SAF demand

What's happening? Asian used cooking oil prices reached two-month highs on June 19, driven by geopolitical tensions, increased seasonal demand, and the emergence of an arbitrage window. Prices have recovered from lows seen in April and May, as demand and inquiries from buyers have picked up after a period of low demand earlier in the year. Traders in the Straits of Malacca report that current UCO offers are elevated, making purchases challenging, while buyers remain cautious, waiting for price stabilization.

What's next? Looking ahead, the market is expected to see a short-term increase in prices, according to sources,due to potential US involvement in the Israeli-Iran conflict and rising demand for sustainable aviation fuel. Buyers are cautious, waiting for price stabilization, while uncertainties surround the US biofuels tax credit and reciprocal tariffs. Seasonal demand in Europe and a slight arbitrage opportunity between China versus European SAF could further boost interest in China's UCO feedstock. Additionally, China's recent export whitelist and quota for SAF are likely to stimulate domestic UCO demand, indicating an upward trajectory for UCO prices in the near future.

Related story: Asian UCO prices hit two-month highs amid geopolitical tensions, SAF demand

Reporting and analysis by Philip Vahn, Oceana Zhou, Amrutha Dileep Chingoroth, Guadalupe Nunez and Chau Kit Boey