Global Disruptions and Biofuel Shifts Signal Volatile Crude Outlook for Bakken

Renewed global interest in biofuels, driven by recent severe oil price volatility, is adding another layer of uncertainty to the long-term demand outlook for Bakken crude, according to analysis from OilPrice.com. The revival in biofuel investment comes as the U.S.-Israeli war on Iran and the resulting closure of the Strait of Hormuz—a key energy trade corridor—have led to energy shortages and sharply higher oil prices in recent months.

This geopolitical disruption directly impacts global crude flows and pricing benchmarks against which Bakken crude is sold. China, a major crude importer, has called for the "unimpeded flow of shipping" through the Strait of Hormuz, Rigzone reported. Any prolonged blockage threatens global supply chains and market stability.

Concurrently, Russia's subsidy payouts to oil refiners that supply domestic markets jumped more than six-fold in June from a year earlier, according to Rigzone. Such state interventions can alter global refined product trade flows, potentially affecting the competitive landscape for U.S. diesel and gasoline exports, which include products refined from Bakken crude.

The biofuel sector's fluctuating fortunes are central to the energy transition narrative affecting fossil fuel demand. OilPrice.com reported that interest waned in 2025 but is now reviving due to fossil fuel price volatility. The International Energy Agency (IEA) previously stated that to meet net-zero targets by 2050, global biofuel production would need to increase to 10 exajoules by 2030, up from 4.3 EJ in 2022. Major oil firms, including ExxonMobil and Chevron, had committed to biofuel projects, many focusing on sustainable aviation fuel (SAF).

However, growth projections have softened. The OECD said in late 2025 it expected global biofuel use to increase by only 0.9% per year over the coming decade, down from 3.3% annually in previous years, anticipating slower demand in high-income countries due to electric vehicle adoption.

For Bakken operators and North Dakota royalty owners, these combined forces—geopolitical supply shocks, competing national refinery subsidies, and a resurgent, policy-driven alternative fuels sector—point to a period of heightened market volatility. While near-term price spikes from supply disruptions can boost revenues, the longer-term demand picture faces pressure from the global push for alternatives, particularly in hard-to-abate sectors like aviation that biofuels aim to decarbonize.