ULSD

Ultra-Low Sulphur Diesel (ULSD) is the refined distillate grade with a maximum sulphur content of 10 parts per million (ppm) mandated for road diesel in the European Union and the United Kingdom, and 15 ppm under the equivalent US Environmental Protection Agency standard. In practice the market treats the two as functionally equivalent for blending purposes. ULSD underpins two of the world's most liquid energy futures contracts: the ICE Low Sulphur Gasoil (LSGasoil) futures traded in London, which physically delivers to Amsterdam-Rotterdam-Antwerp (ARA) barges and serves as the European heating oil and diesel benchmark, and the NYMEX ULSD heating-oil contract traded in New York, which delivers to New York Harbour. The ICE Gasoil crack — the margin between ULSD and its crude input — held near $54/BBL in late May 2026 even as Brent fell $14, reflecting the physical distillate deficit in Europe caused by Hormuz disruption and the BP Rotterdam outage .

European ULSD demand runs at roughly 3.5-4.0 million Barrels Per Day and is met from domestic refining, pipeline and barge flows from Russia (now substantially curtailed under sanctions), and seaborne imports from the Middle East and US Gulf Coast. The import channel via the Strait of Hormuz accounts for a significant share of European distillate supply during periods of tightness. US ULSD prices topped $5 per gallon in March 2026 — up 34% — as Hormuz disruption propagated into The Atlantic distillate complex, demonstrating the supply-chain link between Gulf cargo routes and US retail fuel markets .

As a benchmark grade, ULSD is distinct from low-sulphur fuel oil (LSFO, 0.5% sulphur) used in marine bunkers and from vacuum gasoil (VGO) used as a refinery feedstock, although all three are co-produced in the distillation column. The crack spread between ULSD and crude (the "diesel crack" or "gasoil crack") is the primary profitability indicator for European refining runs. A structurally elevated crack, as seen in 2026, incentivises maximum distillate yield cuts at complex refineries and draws arbitrage cargoes from US Gulf Coast ULSD into ARA.