The global energy markets are facing a prolonged period of heightened volatility in both crude oil and refined product markets as a result of major conflicts in Ukraine and the Middle East.
Volatility in crude oil and refined product prices looks set to increase further, creating price risk management opportunities in the futures and options markets. Benchmark futures products, like CME Group WTI Crude Oil, NY RBOB Gasoline and NY Harbor ULSD, have all seen robust trading volumes from international firms as a result as inventories continue to decline, forcing markets to readjust energy flows to continue to meet demand.
European and Asian markets have been most affected by the recent conflict in Iran amid the continued opening and closing of the Strait of Hormuz. As international buyers compete for a reduced pool of cargoes, the U.S. has emerged as an important supplier, leveraging its scale to supply global markets.
Oil Futures Curve Reshapes Amid Shifting Market Dynamics
The futures forward curve serves as a key market-based indicator of immediate supply-and-demand balances. Following the outbreak of conflict in Iran, global crude oil markets shifted into steep backwardation, a market structure where near-term contracts trade at a premium to deferred positions. Prior to the conflict in February 2026, the WTI December 2026-December 2027 calendar spread stood at approximately $0.10 per barrel. By May 2026, that spread surged past $10.00 per barrel while exhibiting ongoing volatility.This market behavior reflects the shifting sentiment around physical supply tightness and regional export flows, driven by alternating truce negotiations and renewed hostilities in the Middle East.
Supply Disruption Across the Barrel: The Refined Products Impact
The ongoing disruptions in the Strait of Hormuz are widespread and have restricted the supply of both crude oil and refined products, with the Strait being the main choke point for shipments entering and exiting the Persian Gulf.This supply tightening is clearly reflected across major refined product benchmarks, such as CME NY Harbor ULSD and NY RBOB Gasoline futures markets, where both outright prices and crack spreads (the price difference between the market value of refined products and crude oil) remain near historical highs. Diesel crack spreads in the U.S. traded as high as $100 per barrel in August, which is the highest recorded level. As inventories continue to decline globally, due to the low levels of re-supply, refined products could face a prolonged period of higher prices. At 103.3 million barrels, total distillate stocks remain nearly 9.5% lower than a year ago and also below the five-year average. As a result, diesel and gasoline retail prices in the U.S. are at all-time highs.
Asia-Pacific Refiners Turn to U.S. Markets
Amid a widespread supply shortage and sustained crude oil prices, the U.S. has solidified its position as a global export powerhouse, with total exports of crude oil and refined products reaching all-time highs of more than 13.5 million barrels per day (bpd) in May 2026, a 30% increase year on year. Driven by robust domestic production and surging global demand, particularly as a replacement for disrupted Middle Eastern supplies, weekly U.S. crude export volumes have consistently hovered between 4 million and 5 million bpd throughout the year, according to the latest data from the Energy Information Administration (EIA).A substantial volume of U.S. crude is destined for Asia’s largest economies. Following the lifting of the U.S. export ban in 2016, shipments to Asia grew significantly, frequently accounting for 40% to 50% of total U.S. crude exports before European buyers stepped up their consumption in the wake of the Russia-Ukraine war.
Now, the recent conflict in the Middle East has forced Asian refiners to once again scale up their intake of U.S. barrels. Asia typically relies on the Middle East for roughly 60% of its crude imports, leaving the region highly vulnerable to the current crisis.
While South Korea has long been a major consumer of U.S. crude and quickly accelerated purchases amid the supply crunch, Japan, which traditionally sources more than 90% of its crude from the Middle East, has drastically pivoted to the U.S. for alternative supplies.
Similarly, Singapore, a pivotal regional refining hub, has resumed active purchasing of U.S. crude as flows through the Strait of Hormuz remain severely disrupted. However, the overall share of crude oil flowing into Asia from the U.S. remained around its historical average level of 40%, which can be partly attributed to the rising volumes of imports into other regions, such as Europe.
European Calls for Alternative Crude Supplies Grow Louder
The European market has been under pressure since Russia’s 2022 invasion of Ukraine, dealing with the economic effects of a sharp reduction in spot natural gas from Russia. The region has been importing larger volumes of U.S. natural gas in the form of Liquefied Natural Gas (LNG) and is turning to the U.S. once again as it looks to mitigate the worst of the effects from the conflict in Iran.The latest export data for crude oil from the U.S. Gulf Coast shows a notable increase in the total exports being sold into northwest Europe and the Mediterranean, reaching more than 2 million bpd in the first six months of 2026, an increase of around 20% compared to the same period last year. As the shortage of barrels from the Middle East takes hold and higher prices become more likely, refiners have turned to alternative suppliers in regions where supplies are considered to be more readily available. The U.S. is seen as a credible alternative for the market.
These changes are supportive for the role of CME Group WTI futures on the global stage as refiners become more directly tied to the U.S. benchmark price. The role of WTI was also further enhanced by following the 2023 change to include WTI Midland within the Dated Brent complex. 
Increasing Flows from the U.S. Provide More WTI-Linked Pricing Opportunities
The geopolitical headwinds affecting crude oil prices have significantly shifted the flows of energy worldwide. The war in Ukraine and ongoing military conflict in Iran with the closure of the Strait of Hormuz have disrupted traditional crude supplies, most notably across Asia-Pacific and in Europe. The relevance of WTI as a global benchmark is increasing as its pricing is already heavily utilized in the Atlantic basin.At the same time, Asian refiners continuing to process significant volumes of U.S. crude will likely reinforce the role that WTI plays on the global stage. In an era marked by unprecedented supply disruptions and price volatility, WTI-linked oil pricing is becoming more relevant than ever.