War and export bans squeeze fuel supply — go long US oil refiners
Thesis
A combination of military escalation in the Middle East and a sudden Russian export ban is creating a desperate global scramble for fuel. Reuters reports that US diesel futures just posted their biggest daily jump in four years after Russia halted exports. Meanwhile, Bloomberg notes that US military strikes against Iran are threatening to choke off shipping lanes, and the US has revoked Iran's license to sell oil globally. When the supply of fuel drops dramatically but demand stays steady, the companies that actually process and refine that fuel see their profit margins explode. Going long the companies that make diesel and gasoline is the cleanest way to trade this supply crunch.
Strategy approach
Build a rule-based strategy that enters long USO on D1 when oil prices make a 10-day high and refine crack spreads (measured via the spread between ULSD and WTI crude oil futures) widen to a 20-day high. Hold for 14 days and exit if the RSI(14) crosses below 50 or if price hits a 5% trailing stop.