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CommoditiesMedium•17 April 2026•

1 min read

Biodiesel Prices Drop Below Conventional Diesel Amid Iran War Supply Squeeze

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Key Facts

1Biodiesel prices have dropped below regular diesel for the first time due to the oil supply squeeze driven by the Iran war.

Energy markets have witnessed a rare inversion as biodiesel prices dropped below conventional diesel for the first time, driven by an oil supply squeeze from the ongoing conflict in Iran. The blockade of the Strait of Hormuz and persistent Middle East supply disruptions have made petroleum-based diesel scarce and expensive, forcing global refiners to seek alternatives. There is currently a global scramble to secure replacement fuels as traditional supply chains remain under severe pressure. This price flip is expected to drive up demand for agricultural feedstocks, such as soybean and palm oil, used in biodiesel production. The situation reflects a severe physical shortage in the middle distillate market, highlighting the desperation within the traditional energy sector amid geopolitical instability.