Oil Surges After U.S.–Israel Strike on Iran | Strait of Hormuz Risk & Fertilizer Spike

Arlan Suderman opens with an apology for his recent absence due to travel, then launches into a dense commodity-market briefing covering three interlocking developments. **Biofuels (RVO Guidelines):** The EPA has forwarded final RVO guidelines to the White House Office of Management and Budget — the last step before public release. Suderman notes speculation that OMB may be reviewing on a rolling basis, which could mean a very fast turnaround, though the typical expectation was ~3 weeks. A Reuters story citing multiple sources says the plan includes offsets for roughly 50% or more of small refinery exemptions, with industry chatter pointing to as much as 75%. Either way, this is constructive for soybean oil, canola oil, and related feedstocks. The RIN price rally has already pushed renewable diesel back to breakeven, restarting production. …

1. EPA RVO biofuels guidelines advanced to White House OMB — final step before release. Expected 50-75% small refinery exemption offsets, bullish for soy/canola oil demand. RIN prices already at renewable diesel breakeven.
2. Xi Jinping's military purge reaches legislature: formal removal of 5 of 6 Central Military Commission generals re-cements Party support behind Xi, marginally strengthening his negotiating position vs Trump.
3. Suderman reduces confidence in an 8 MMT soybean deal with China after US negotiators hit 'rough spots' — talks continue but have become harder. Base case is still a deal, conviction lower.
4. Coordinated US-Israel strike killed ~49 top Iranian leaders in a single daytime meeting. Trump claims 4 weeks of work done in one blow. Power vacuum raises civil war risk but no clear opposition leader exists.
5. Strait of Hormuz effectively closed — not by physical blockade but by shipper fear and prohibitive insurance costs. Hundreds of tankers anchored, refusing transit. Removes ~20% of global seaborne crude.
6. Fertilizer crisis: ~1/3 of global urea and 20-25% of ammonia transits Hormuz. Urea already +$70-80/ton in New Orleans. China restricting phosphate exports. Hits just before Northern Hemisphere spring planting.
7. China's muted protest of the Iran strike signals Beijing values maintaining the US relationship over backing its Iranian ally during its own domestic political challenges.
8. Inflation trade emerging in Treasuries with yields rising. StoneX data shows grains/oilseeds have 0.88 CPI correlation (vs 0.83 energy) — possible rotation into ag commodities if inflation narrative persists.

• Civil war speculation is a significant leap: Suderman presents the possibility of Iranian civil war as though it follows from the leadership decapitation, but provides no evidence that opposition forces are organized, armed, or capable of mounting a challenge — and he himself notes the opposition leadership was killed by the prior regime. A power vacuum does not automatically imply civil war; authoritarian successions often produce orderly (if opaque) transitions.
• The grain/oilseed rotation thesis relies entirely on a single 10-year historical CPI correlation (0.88). Correlation is not causation, and he provides no forward-looking catalyst specific to grains — no discussion of planting conditions, stocks-to-use, or demand drivers. This is a 'rhyming history' argument dressed in data.
• The fertilizer price analysis conflates a short-term logistics disruption (Strait transit fear) with a production problem. He acknowledges 'much of the fertilizer is already in place' for spring, which significantly weakens the case for sustained fertilizer inflation, though he does not address this tension.
• Suderman's China analysis is internally consistent but entirely inferential: the assertion that Xi's purge was about loyalty, that the legislature's move 're-cemented' Party support, and that China's muted Iran statement reflects US-priority calculus are all plausible interpretations but are presented with more certainty than the evidence (social media posts, a brief official statement) warrants.
• The claim that the Strait is 'effectively closed' is attributed to shipper fear and insurance costs, but no specific insurance rate data or shipping-company statements are cited — this is based on 'what news reports say.'