When green became cheaper than black

Renewable diesel becoming cheaper than fossil diesel during the Iran–US conflict was not the result of a single factor, but a convergence of global instability and domestic resilience. To understand this unusual moment, it’s essential to examine the geopolitical backdrop. The Iran-US confrontation – marked by sanctions, military posturing and disruptions to shipping routes – sent shockwaves through global oil markets. The Strait of Hormuz, through which roughly a fifth of the world’s crude oil passes, became a flashpoint. Even the threat of disruption was enough to send crude prices soaring. Fossil diesel prices are tightly tethered to crude oil benchmarks such as Brent and WTI. When geopolitical tensions rise, traders price in risk, pushing futures contracts higher. This risk premium inflates the cost of refining and distributing petroleum-based fuels. Renewable diesel, however, is insulated from crude oil volatility. Produced from feedstocks such as used cooking oil, tallow and vegetable oils, its price structure is shaped by agricultural markets, wastecollection...