Throughout October, rapid geopolitical shocks seemed to override structural biofuels policy. The beligerant narrative between the US and Iran continued, driving the Dec26 Brent crude futures contract to settle at $117.64/bbl on the 30th of October. Furthermore, wholesale diesel prices also peaked, reaching all-time-highs of around 220$/barrel, with wholesale crack spreads and refining margins driving the cost pressure.
This surge in conventional fuel prices has strengthened the case for alternative fuels. While European compliance rules and the ongoing wait for the US 45Z tax credit guidance remained in the background, trading was primarily influenced by soaring oil prices and restricted product availability, sending biofuel prices sharply upward as blenders aggressively sought alternatives to increasingly expensive conventional hydrocarbons.
Sustainable Aviation Fuel (SAF) saw its own supply constraints exacerbated by the broader energy crisis. While Europe’s ReFuelEU Aviation mandate continues to provide a structural demand floor, the surge in conventional jet fuel costs meant airlines and blenders faced intense pricing pressure. The scramble to secure alternative volumes intensified feedstock competition, particularly for HEFA-based pathways reliant on used cooking oil (UCO) and animal fats.
Renewable diesel and conventional biodiesel experienced a dramatic reversal from the inventory-heavy, sideways trading seen in the third quarter. With petroleum diesel becoming prohibitively expensive, demand for palm-oil-based biodiesel and Used Cooking Oil Methyl Ester (UCOME) surged, as they became relatively cheaper substitutes despite their own rising price tags.
Looking ahead, the energy sector remains extremely sensible to geopolitical resolutions and raw material scarcity. With global gas and oil supplies expected to fall short of demand in Q4, the market faces an exceptionally tight system. If crude supply disruptions persist, scarcity-driven price support will likely intensify, testing whether feedstock supplies can handle the converging demand from road, marine, and aviation sectors.
