Two Forces Lifted Feedstock in 2026. One Is Starting to Wobble.
A market read from the Reiter Trading desk. Figures as of late July 2026.
Feedstock prices do not usually get pushed around by a shooting war and a federal rulebook at the same time. In 2026, they did. Understanding both forces, and why one of them is now weakening, matters for anyone who collects or sells used cooking oil.
Here is the short version. A Middle East conflict drove crude and heating oil higher, which lifted margins on both petroleum and renewable fuels. At the same time, the EPA set record renewable-fuel mandates, which set off a rally in RIN credits. Together they created enormous demand for feedstock and pulled soybean oil up with it. Now soybean oil is stretched, and the first cracks are showing.
The oil side: Iran and the distillate spike
The geopolitical story was not a single event. It came in waves. A brief Israel-Iran exchange in June 2025 spiked oil and then faded, because no barrels actually stopped moving. The 2026 conflict was different. Strikes on Iranian energy infrastructure and pressure on the Strait of Hormuz created real supply risk, and distillate felt it hardest.
By late March 2026, New York Harbor heating oil pushed past $4.26 a gallon, its highest level since 2022, up roughly 50 percent on the month. Renewed strikes and tanker attacks kept the market jumpy through July, with heating oil still north of $4.00.
Higher diesel and heating oil prices do not just help refiners. They lift the value of every gallon of renewable diesel and biodiesel too, because those fuels are priced against the petroleum barrel they replace. Producer margins widened on both sides of the aisle.
The policy side: a record mandate and a RIN rally
While the war moved the oil price, Washington moved the mandate. On March 27, 2026, the EPA finalized its “Set 2” Renewable Fuel Standard volumes for 2026 and 2027, and they were the largest in the program’s history. Biomass-based diesel was set at 9.07 billion gallons for 2026 and 9.20 billion for 2027, roughly 70 percent above the 2025 level. The agency also declined, for now, to cut the RIN value of imported fuels and feedstocks.
Bigger mandates mean producers need more RINs, the compliance credits that prove renewable fuel was actually made. Prices responded. D4 biomass-based diesel RINs roughly doubled through the first half of 2026, trading around $2.41 in early June, close to record territory.
That RIN strength is what let US buyers do something important: outbid subsidized European buyers for the feedstock gallons needed to meet the mandate. Europe’s RED III targets and its anti-dumping duties on Chinese biodiesel have tightened the global waste-feedstock pool, and strong US RIN values pulled a growing share of that pool toward American plants.
The result: strong feedstock demand and the soybean oil rally
All of that demand had to land on a feedstock, and the biggest one is soybean oil. It rallied hard, trading in the low 70s of cents per pound through mid-2026, with the USDA lifting its season-average forecast to 70 cents for 2026/27 from 64 cents the year before.
It also changed the pecking order at the bottom of the barrel. As soy-based renewable diesel margins compressed from around a dollar a gallon toward fifty cents, used cooking oil and other waste fats became the marginal gallon, the feedstock that sets the economics at the margin. Waste feedstocks carry lower carbon-intensity scores, which earn premium pricing under the newest clean-fuel incentives. In plain terms, well-sourced UCO went from a nice-to-have to one of the most fought-over commodities in US biofuels.
The crack in the story
Here is the part a lot of collectors will miss. The rally is showing its first signs of fatigue, and you can see it in the relationship between soybean oil and heating oil.
Normally the two move together, because soybean oil is a biodiesel feedstock priced off the diesel barrel. On July 14, 2026, that link slipped. Heating oil jumped nearly 8 percent on the day while soybean oil rose only about 3 percent. The energy spike was real, but the feedstock market did not fully believe it, treating the latest war premium as temporary rather than permanent.
Soybean oil has other headwinds building behind it: a large US soybean crop weighing on supply, a steady flow of imported feedstocks and renewable diesel displacing domestic oil, and softening energy prices every time the Middle East cools off. None of this means the bull market is over. It means the easy part is.
What it means if you collect UCO
Two takeaways.
First, the demand under your product is real and structural. Record mandates, tight global feedstock supply, and Europe competing for the same gallons are not going away in 2026 or 2027. That is a strong backdrop for anyone selling used cooking oil.
Second, a market that has run this hard and is now showing headwinds is exactly when it pays to lock in value instead of riding the spot price up and down. That is what medium and long term price and supply agreements are for. Instead of taking whatever the market offers on the day you happen to sell, you fix a price and a guaranteed home for your gallons ahead of time, and take the guesswork out of your revenue.
The operators who do best from here will not be the ones trying to guess where soybean oil trades next week. They will be the ones who used a strong market to put price protection in place before the market decided for them.
Worried about protecting your price while the market is still strong? Talk to the Reiter Trading desk about medium and long term price and supply agreements for your used cooking oil, and check where feedstock is trading now on our market data page.