EPA proposes 100% reallocation of refiner biofuel exemptions as diesel shortage deepens

Diesel keeps writing its own headlines — IEA now says the supply squeeze runs "well into 2027," and EPA just handed refiners a fresh blending bill to cover 2025's small-refinery exemptions. Crack spreads are fat, farm groups are thrilled, and refiners are quietly becoming the market's new darlings.

Diesel remains the defining story: ULSD spot sits at $4.713/gal with a diesel crack near $102/bbl, and the IEA now projects the global diesel shortage persisting well into 2027, with futures implying roughly $6 diesel into January. EPA's proposal to fully reallocate 2025 small-refinery-exemption volumes drew wide praise from farm and biofuel groups while shifting compliance costs onto larger refiners, a move markets are already pricing into refiner equities. Geopolitical risk continues to underpin crude and product prices, with Houthi strikes on Aramco infrastructure and Russia-Ukraine energy-site attacks adding supply-side uncertainty even as crude climbs for a fifth session.