Yearly Archives: 2026

Happy 4th Of July!

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Happy Friday and 4th of July weekend!

Oil finished the week around $69 a barrel and this was a week where the price kept drifting lower even as the news got more complicated. The Strait is still open and tankers are still moving, but the talks between the US and Iran are going nowhere fast, and both sides are starting to look pretty far apart on the most important questions. Here is what drove the market this week.

Monday started with oil bouncing back to about $70 a barrel after a rough weekend. Over the prior few days, Iran struck an oil tanker inside the Strait, the US fired back with fresh airstrikes, and several big ships that were planning to cross turned around and went home. But Monday brought an agreement from both sides to stop the reciprocal strikes and get back to the table.  And that was enough to push prices back up about 1%. The ceasefire is still fragile, but it held. Saudi Aramco kept loading oil after the strikes, so some optimism remained in the market. A fourth supertanker was spotted loading there on Monday, adding to the three that moved the week before.  Venezuela had a rough weekend too.  A power outage from the earthquakes knocked out its biggest refinery. The good news is it came back online, and the country confirmed its oil production and exports were not affected.

Tuesday brought a diplomatic disappointment. US envoys flew to Qatar to restart talks with Iran. Iran didn’t show up. A Qatari official confirmed no high-level meeting happened, and mediators were basically just trying to keep things from getting worse. This matters because the 60-day window for turning the signed agreement into a permanent deal is ticking.  Oil barely moved on Tuesday, holding near $71, which tells you the market had largely expected this. The bigger picture on Tuesday was that banks were cutting their oil price outlooks for the rest of the year for the first time since the war started.  Gulf oil is coming back to market faster than the peace negotiations are moving forward, and analysts now expect there to be more oil than the world needs next year. Iraq started offering massive discounts to any buyer willing to send a tanker through the Strait.  When a country is pretty much selling oil at cost, that tells you the supply picture has shifted from a few months ago.

Wednesday was quiet on the diplomatic front but busy on the data side. The government’s weekly oil report showed US crude stocks fell another 3.8 million barrels, leaving inventories about 7% below where they normally are this time of year. Gasoline also dropped 2.3 million barrels and is 7% below seasonal average. On the flip side, diesel stocks rose 2.5 million barrels, which continues to be a surprise. Refineries were running at 96.6% of capacity which is essentially full speed. There was an interesting data point discussed in the report.  Americans are actually using less gasoline and diesel than they did a year ago. High prices from this spring left seem to have finally hit pocket books and people are cutting back. US crude oil production hit a record high in April of almost 14 million barrels a day.  The extra supply is going to add to the global surplus that analysts are worried about in 2027. Russia’s fuel problems got even worse on Wednesday.  Russia is now buying gasoline from India by ship. Ukraine has shut down so many Russian refineries with drone strikes that Russia is no longer able to produce enough finished product to meet the country’s demand.

On Thursday, oil prices fell again, dropping close to 2%, as the US-Iran talks in Doha wrapped up with what the US called “positive progress” but news outlets in Doha countered with publishing no actual breakthroughs. The 60-day clock keeps running with no deal on the horizon. Iran has somewhere between 58-68 million barrels sitting on tankers with no clear buyers. More than 90% of those ships show no destination. Iran has until mid-August under the US sanctions waiver to find buyers for that oil. Ukraine struck another Russian oil refinery Thursday adding to the continued growing list of Russian refineries driven offline.

Chicago spot prices did not move that much this week, and the market moved pretty much in line with crude oil. Diesel made some big up-and-down swings during the week but ended up right about where it started. Gasoline was flat all week. I expect to see prices at the pump stay about the same heading through the holiday weekend.

The big news on propane is that prices dropped heading into July. Demand has been weak, production has been strong, and even though exports are running at record levels, inventories remain at high levels. Combined with lower crude prices, propane prices moved down to its lowest price of the year. This is the best time we have seen all summer to fill your tank. I still strongly recommend topping off now and locking in some gallons for next heating season while prices are this low.

As always, if you have any questions please feel free to give us a call. Have a great weekend and Happy Fourth of July!

Best regards,
Jon Crawford

Sources: Bloomberg, Reuters, Wall Street Journal

Hanging On By A Thread, Or Is This For Real?

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Happy Friday!

WTI crude oil ended the week around $69 a barrel.  The current price is below where prices were before the Iran war began.  And this was the week the market made clear it believes the supply is actually coming back. From Monday’s peace talk optimism to Thursday’s record flows through the Strait, prices fell nearly $7 in five trading sessions. And yet, by Friday, a vessel attack near Oman, Iran turning back tankers it deemed unauthorized, a revealing of unreported damage to the U.S. naval base in Bahrain reminded everyone that $69 is a trading level, not necessarily a reality.

The week opened Monday with encouraging signals out of Switzerland. The first formal round of U.S.-Iran peace talks wrapped up with both sides calling it “major progress,” and Vice President Vance publicly confirmed the Strait of Hormuz is open for business. Iran’s Foreign Minister confirmed that Iran had secured waivers allowing oil exports to begin, frozen assets would be released, and that the reconstruction fund has been formally launched. Oil fell on the news.  Physical proof supported the announcements on Monday. More than 25 million barrels of Iranian crude passed through the blockade, and the US reported that 55 ships crossed the Strait on Saturday carrying roughly 17 million barrels. Even though the day before Iran’s Revolutionary Guard briefly declared the Strait closed again, citing Israeli strikes in Lebanon, Iran kept the oil flowing.

Tuesday brought the week’s biggest policy shift. The U.S. officially waived Iran’s oil sanctions for the first time in nearly a decade, authorizing the sale of Iranian crude through August 21. It is a dramatic reversal after years of maximum pressure designed specifically to keep Iranian barrels off global markets. Although selling that oil is harder than it sounds. About 68 million barrels of Iranian crude are sitting on the water and most are available for purchase.  But the market is full. EU and UK restrictions remain in place even with the U.S. waiver.  Some ports may refuse Iran’s shadow tanker fleet entirely. And buyers are wary that Trump could reverse the waiver at any moment, leaving them committed to a cargo that becomes sanctioned again mid-deal. China, Iran’s traditional anchor buyer, is not rushing to purchase.  China’s domestic demand is flatlining and private refiners there are running at a nine-year low utilization rate.

Wednesday was when prices really broke. WTI fell to about $72 a barrel as tanker traffic through the Strait kept building and Middle Eastern supply rushed back onto a market that had been short of barrels for months. Physical crude cargoes started selling at discounts in multiple markets, a clear sign that supply was outpacing near-term demand. The war premium in oil had not just unwound, it started to reverse. But a serious crack appeared on Wednesday. Trump stated publicly that Iran had agreed to nuclear inspections “into infinity” as part of peace negotiations. Iran’s side flatly denied ever making that concession. That is not a small disagreement over wording.  Nuclear inspections are the core issue the 60-day ceasefire window was supposed to resolve. On the domestic supply front, the weekly EIA inventory report confirmed crude stocks fell another 6.1 million barrels last week and are still about 7% below the five-year average.  The massive draw was even more defined because gasoline stocks rose 2.1 million barrels and distillates climbed 3.1 million barrels.

Thursday brought WTI below $70 a barrel for the first time, closing at $69 and fully erasing all the price gains from the four-month Iran war. Th U.S. confirmed at least 20 million barrels of oil exited the Strait in the previous 24 hours.  But Iran made clear it intends to keep managing traffic on its own terms.  Whether the Strait truly returns to an open or remains under Iran’s effective management is one of the most important unresolved questions hanging over the long-term stability of global oil supply. Trump addressed Iran’s desire for tolling by stating he will not accept any peace deal that includes tolls on ships transiting Hormuz.  Iraq complicated the OPEC picture Thursday as well, signaling it is considering leaving the organization if it does not get a significant quota increase. Iraq is OPEC’s second-largest producer and one of its five founding members.  Losing Iraq two months after losing the UAE would be a serious blow to OPEC’s ability to manage global supply. China added to the bearish pressure by raising its refined fuel export allowance for state refiners in July with no restrictions on destination countries.

Friday closed the week with WTI near $69, but not without drama. Saudi Aramco resumed oil loading after nearly a four-month halt.  There were two very large crude carriers actively taking on crude, with a third waiting nearby. But a cargo vessel reported being struck by Iran near Oman on Thursday.  The UN’s Maritime Organization responded by pausing its escort operation through the Strait. Iran doubled down on the attack. Iran reasserted its right to control all shipping through the waterway, warned Gulf states against siding with the U.S., and the Revolutionary Guard turned back three tankers attempting what it called unauthorized passages. Iran made its position explicit: ships using routes not designated by Tehran do so at their own legal and financial risk. Iran is reacting to that united front between Gulf Nations and the US, and Friday’s events make clear the standoff over who actually controls the Strait is far from resolved.

Chicago spot market was very wonky this week as the July prompt spot contract expired and moved to August.  There was a frenzy of gasoline trades placed at the expiration causing pricing frustration.  Gasoline prices whipsawed in opposite directions of predicated price indicators.  Hopefully by the start of next week we will see some balance in the gasoline market.  For now, retail prices should still stay in the current range.  Diesel prices did not experience the same volatility as gasoline at month end.  Diesel prices continue to drop, and I expect to see retail prices continue their slow and steady decline.  Also, a massive refinery in Pennsylvania went down with a fire and traders are waiting patiently to see if some Chicago supply might be moved east.  Time will tell.

Propane spot prices surprisingly dropped this week after months of stability.  Retail prices dropped but nothing majorly significant compared to the last two months.  I still believe that filling up your tank now is a good buy and I recommend locking in some heating gallons for next season.

As always, if you have any questions, please feel free to give us a call. Have a great weekend!

Best regards,

 

Jon Crawford

Sources: Bloomberg, Reuters, Wall Street Journal

Lots To Discuss Even Though Markets Were Closed Friday

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Happy Friday!

Oil is ending the week right around $77 a barrel.  This was the week the world actually saw a peace deal get signed, watched the first supertankers move through the Strait of Hormuz in months, and celebrated gasoline dropping below $4 a gallon for the first time since March. And then Friday morning brought a fresh complication that reminded everyone how fragile this whole thing still is.

The week started Monday with oil already down sharply after Trump announced over the weekend that the U.S. and Iran had agreed to an interim peace deal. Pakistan’s prime minister confirmed that both sides would sign a formal memorandum of understanding in Switzerland on Friday. The terms were significant: the Strait of Hormuz would reopen toll-free, the U.S. naval blockade of Iranian ports would end, and Iran would get the right to resume oil exports immediately. The E4 nations said they were prepared to lift sanctions on Iran in exchange for steps toward nuclear disarmament. Iran agreed in principle to not produce or acquire nuclear weapons and to dramatically reduce its enriched uranium stockpile.

The market priced all of this in with cautious optimism rather than outright celebration, and I think that was the right call. Oil traders have watched Trump announce imminent deals on the Strait many times since February only to see fighting resume. The full text of the agreement still had not been released Monday, and major shippers said they would not restart Hormuz transit until the waterway was confirmed safe, including mine clearance.

What most people did not know until Tuesday was that the U.S. military had been quietly running a covert ship-to-ship oil transfer operation since early May to keep Gulf energy moving during the war. At least 92 ships were involved with handoff points near Fujairah in the UAE and Oman’s port of Sohar. Here is what I find remarkable about that.  This is the exact same technique Iran has used for years to evade U.S. sanctions. Washington borrowed Iran’s own playbook to keep oil flowing during the war with Iran. Oil fell further on Tuesday, extending the two-day slide.

Wednesday brought more detail on the deal itself. Further details explained that Iran would be allowed to resume oil sales immediately upon signing, and the agreement included access to a $300 billion fund to help rebuild Iran’s economy.  The IEA also weighed in Wednesday with its first look ahead at 2027.  They believe global oil supply is on track to surge roughly 8 million barrels a day next year while demand grows by only 2 million. On the domestic supply side, the weekly inventory report showed crude stocks fell another 8.3 million barrels, leaving U.S. inventories about 6% below the five-year average. Gasoline is also 6% below normal and distillates are 13% below.  These inventory deficits are occurring all while refineries are running at 96.7% utilization.

Thursday was the big day of the week. Trump and Iran’s President both signed the memorandum of understanding.  Within hours of signing, three Saudi-flagged supertankers carrying a combined 6 million barrels of crude crossed the Strait. Ship-tracking data showed at least 12 million barrels of crude in motion out of the Persian Gulf by midday. Shippers are still moving carefully.  In addition, Ukraine also struck another Moscow main oil refinery on Thursday in a major drone attack, the second strike on the facility that week.  The strikes were a reminder that Russian energy infrastructure remains under continued pressure.

And then Friday arrived. Switzerland announced that the formal U.S.-Iran peace talks scheduled for today in Geneva will not take place.  The postponement does not cancel the signed agreement.  On top of that, Iran’s Revolutionary Guard Corps has quietly set up new covert cells in Iraq with the aim of carrying out attacks on Gulf countries that host American forces.  That kind of activity is exactly the type of thing that could unravel this deal if it escalates.

The dollar had its biggest two-day rally in three months.  The Fed held rates steady Wednesday under new chairman Kevin Warsh, as expected. But Warsh made clear the Fed will not tolerate a resurgence of inflation, and half of the rate-setting committee is now projecting a rate hike by year-end. Two-year Treasury yields jumped 13 basis points in a single day.  This was the biggest single-day move in more than a year.  These economic decisions affect the strength of the dollar which puts pressure on oil prices.  Regardless, national average for gasoline at the pump dipped below $4 a gallon for the first time since March.

One of the more lasting takeaways from this week is how permanently the Hormuz closure has changed the way the oil world thinks about risk. Japan sourced roughly 90% of its crude from the Persian Gulf before the war. It now maintains a steady base of U.S. oil purchases every month and is not going back. Saudi Arabia and the UAE are accelerating pipeline expansion plans to bypass the strait entirely. That infrastructure buildout will reshape the region’s energy geography for decades.  And it means the next disruption of the Strait will hit a market that has already started rewiring itself, therefore, taking some leverage out of the hands of Iran.

Chicago had a quiet week, and after the past two weeks of volatility, I will take it. The spot market traded in lock-step with crude oil, inventories are healthy, and basis movements were stable. Diesel prices at the pump should continue to drift lower as inventories replenish with cheaper cost product. Gasoline was mostly stable and I do not expect much change there heading into next week.

Propane continues to trade in a very narrow range and I do not expect to see any meaningful price drop unless crude oil prices collapse further.  And given everything that is still unresolved, I would not count on that. The situation looks a bit rosy right now, but we are definitely not out of the woods yet. I still strongly recommend topping off your tank this summer and locking in some heating gallons for next winter before any surprises push prices higher. We have prepay, budget, and price-lock options available.  Give us a call and we will get your summer fill scheduled and walk you through your contract choices.

As always, if you have any questions please feel free to give us a call. Have a great weekend!

Best regards,
Jon Crawford

Sources: Bloomberg, Reuters, Wall Street Journal

Let’s Make A Deal!

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Happy Friday!

Oil ended the week at its lowest price in nearly two months, settling around $84/barrel, after Trump called off threatened new military strikes on Iran and a Western a ceasefire deal could be signed as soon as Sunday. That is the biggest piece of good news the oil market has seen since this war began. Here is what is driving the market.

This was a week where the fighting and the diplomacy happened at the same time, which made it impossible to know which way things were heading on any given day. It started with a surprise on Monday when Israel struck Hezbollah positions and an Iranian petrochemical complex over the weekend, and Iran fired missiles back at Israel.  This was the first direct exchange between the two countries since the April ceasefire. The fragile two-month truce seemed to be collapsing. WTI shot up more than 4% at the open. Then Tuesday brought some relief after Trump called on both sides to stop shooting and Iran and Israel stopped attacks.  But both made clear they’d resume if the other acted first, so it was more of a pause than a truce. Wednesday brought another escalation. A US Apache helicopter was shot down near the Strait, Trump ordered retaliatory strikes, Iran hit US bases in Jordan and the Gulf, and Trump began threatening to strike Iranian power plants and bridges. By Thursday the strikes were near-daily, Iran formally declared the Strait of Hormuz closed, and Trump posted on social media that the US would take control of Kharg Island.  Remember, Rharg Island is the terminal handling roughly 90% of Iran’s oil exports. Oil briefly spiked to $95/barrel on that news. And then Friday morning, the tone flipped completely. Trump reversed course, said a deal would be done in days, Iran confirmed active negotiations, and the US military posted that commercial ships continued to move through the Strait. Prices dropped sharply. Nothing is done until it’s signed, but this is the clearest path to a deal we have seen in months.

Beneath all the daily drama, the underlying supply story got a little worse this week. US crude inventories fell another 7.2M barrels, now about 5% below where we would normally be at this time of year. That marks nine straight weeks of declines. Gasoline is 6% below its five-year seasonal average, and diesel is 13% below. Refineries are running at 95% of capacity just trying to keep up. Kuwait did make the first offer to sell refined products from the Gulf since the war began by structuring cargoes to bypass the Strait entirely.  Kuwait is going to use ship-to-ship transfers off India’s west coast and storage terminals in Oman. It is a small amount compared to normal traffic, but it signals that Gulf producers are finding creative ways to move oil even in the middle of active conflict. On the global supply front, Russia is cutting crude exports from its western ports from 2.5M barrels per day in May down to 1.7M in June, adding another layer of pressure to an already tight market.

Stateside, the US quietly became the world’s largest oil exporter for the third month in a row, with American crude and fuel exports running about 10.5M barrels per day in May.  There is one longer-term concern worth keeping an eye on.  When the Strait eventually reopens, every Gulf country will be desperate to pump as much as possible to make up for months of lost revenue. That flood of returning supply all hitting the market at once could push prices sharply lower, and OPEC will have limited ability to coordinate a response. The UAE has already left the cartel and others may follow after the Strait reopens.

Summer is here and American drivers are heading into peak travel season with pump prices still running about 40% higher than before the war started.  Gasoline retail is still overing above $4/gallon. Refineries have been running hard but have been prioritizing diesel and jet fuel production to cover global shortfalls and book incredible margin.  The move to distillates has left gasoline inventories lean. Also worth noting, the government held a federal lease sale in Alaska’s Arctic National Wildlife Refuge this week. Not a single major oil company bid on the lease. The political risk of investing billions in a project that a future administration could shut down was too great. Trump’s administration is feeling pressure on multiple fronts including inflation topping 4% in May.  Inflation has now surpassed increased earnings due to energy starting to drive up the cost of goods.

The weekend could be one of the most important in months for fuel prices. If a peace deal is signed and the process of reopening the Strait begins, prices would likely fall further and quickly. The physical market would still take months to fully recover, but a signed deal would give the world a credible timeline for relief.  However, I’m still in the “believe it when I see it” camp.  Even if a deal is signed, the deal hinges on all proxies to Iran not violating the deal.  The past four months have shown us that stability is far from being reached. Stay tuned.

The Chicago spot market was fairly quiet this week.  No major basis moves occurred.  There as a bit of basis in gasoline, but the price collapse on the NYMEX won’t affect retail prices too much.  I expect to see gasoline retail prices hold below $4/gallon in Central Wisconsin.  Diesel prices have stabilized.  I do expect to see diesel retail prices slowly move lower as inventories replenish post May diesel basis-blowout.

Propane continues to hold.  Propane prices did not drop with the hefty drop in crude oil price this week.  Propane inventories did not build as much as expected.  Propane seems to be approaching price discovery.  I’m not sure we will see prices go lower, even with another $5/barrel coming off crude oil prices.  I highly recommend topping off your tank and locking in your price for the 2027 heating season.

As always, if you have any questions please feel free to give us a call. Thank you and have a great rest weekend!

Best regards,

Jon Crawford

Sources: Bloomberg, Reuters, Wall Street Journal

Lots Of Info, Not A Lot Of Action

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Happy Friday!

Oil is ending the week right around $92 a barrel, roughly where it started. It was one of those weeks where everything went back and forth: good news, then bad news, then good news again. Every time it looked like a deal might be coming together, something happened to push it off.

The back-and-forth on peace talks was the story all week. Monday started with the US and Iran exchanging new strikes over the weekend, which erased the optimism from the prior Friday. Tuesday things brightened up when Iran said it was actively reviewing a proposed ceasefire deal and Trump told the public he expected an agreement to reopen the Strait within about a week. Then Wednesday, Iran fired ballistic missiles at Kuwait and Bahrain.  Both Gulf countries that had not been directly targeted in months. The US struck back near the entrance to the Strait, and the whole diplomatic process collapsed again. Thursday, the Trump administration announced a ceasefire between Israel and Lebanon, which is a big deal because Iran has said all along that Lebanon has to stop fighting before it will agree to anything with the US. Oil prices dropped sharply. Then Friday morning, Hezbollah said it never agreed to the ceasefire terms and rejected it, Israel said it wasn’t leaving Lebanon, and we were essentially back to square one. The market held steady rather than crashing, which tells you traders are cautious but not panicking. Nobody is ready to bet big that this gets resolved soon.

The oil supply situation around the world keeps getting tighter. Last week’s government inventory report showed US crude stockpiles fell 8 million barrels in a single week.  Again, one of the biggest one-week drops since this whole crisis started. We are now sitting about 3% below where inventories normally are this time of year. Gasoline is 5% below normal, diesel is 3% below, and refineries are already running near full speed trying to keep up. The total amount of oil stored in the US, including the Strategic Petroleum Reserve, has dropped for ten weeks in a row and is now at its lowest level since 2004. The head of the IEA’s oil markets division warned this week that global inventories could hit critical levels just as summer demand picks up. That is not a minor concern. The IEA is the world’s top energy agency telling us the cushion is nearly gone.  Therefore, we might not be able to keep kicking this can down the road.

Iran’s oil exports have all but collapsed. New data this week showed Iran was only exporting about 200k barrels per day in May.  This is a six-year low, down from 1.3 million in April, and nearly 1.9 million back in March. The US naval blockade is working. There are currently about 145 million barrels of Iranian crude sitting on tankers at sea with nowhere to go, roughly 65 million of those trapped inside the Gulf. Even at these low export volumes, Iran is having to discount its oil just to get Chinese buyers interested, because Chinese refineries are cutting back amid weak demand at home.

Russia is in the same boat in China. Russia’s oil is also getting discounted. Russia also admitted this week for the first time that its overall oil production has dropped this year. The prime minister blamed routine maintenance issues, but Ukraine’s ongoing drone strikes on Russian oil infrastructure, including a terminal in St. Petersburg hit this week while Putin was hosting his annual economic forum in the same city, are widely seen as the real reason.

Looking into the future, Saudi Arabia and the UAE are spending billions to build new pipelines and export routes that bypass the Strait entirely. They learned from this crisis that relying on one waterway is too dangerous. These new routes will stay in place long after this conflict ends. Meanwhile, India raised fuel prices again.  India has raised fuel prices four times since mid-May, and it is already starting to slow down diesel demand in the trucking industry. When Indian truck drivers start cutting back, that matters globally.

Back home, the May jobs report came in much stronger than expected.  The US added 172,000 new jobs, more than double what economists were forecasting, with unemployment holding at 4.3%. Good news for workers, but it complicates things for the oil market. Strong job numbers mean the Federal Reserve has less reason to cut interest rates, which keeps borrowing costs high, which eventually slows economic growth and reduces fuel demand. In addition, higher interest rates inflated oil prices due to oil being traded on the US Dollar.  The 10-year Treasury yield moved higher to 4.47% heading into the weekend with no rate cuts anywhere in sight.

Chicago finally had a calmer week. The spot market continues to balance with the Group Spot market, and both gasoline and diesel prices moved normally alongside crude oil. Both products have now settled at lower average prices than we saw earlier in the crisis. This is a good time to be buying fuel. Gasoline retail prices should hold roughly steady. There was some volatility this week that may take a few days to fully shake out. But diesel pump prices should keep coming down heading into next week.

Propane prices have not come down despite crude oil pulling back, despite an inventory build this week after export volumes dropped. Inventories had been stubbornly flat during what should be the normal build season, so any increase is positive news. However, traders are still bullish propane exports long-term. Right now is a very good time to lock in your heating gallons for next winter before any surprises push prices higher. We have prepay, budget, and price-lock options available. Give us a call and we will get your summer fill scheduled and talk through your contract choices!

As always, if you have any questions please feel free to give us a call. Have a great weekend!

Best regards,

Jon Crawford

Sources: Bloomberg, Reuters, Wall Street Journal

Are We Finally Seeing SOME Light?..

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Happy Friday!

This was one of the most volatile weeks of the entire three-month Hormuz crisis. WTI crude touched $100 a barrel early in the week, collapsed to $90 on deal optimism midweek, snapped back above $90 when airstrikes resumed, and is ending the week right back near $90 as a potential ceasefire extension waits for President Trump’s signature. Oil moved as much as six dollars in a single session on multiple days. The one certainty heading into the weekend is that nothing is solid until a deal is signed and the first tanker moves freely through the Strait.

The week started with cautious optimism coming out of the Memorial Day weekend.  Iran’s foreign ministry said agreements had been reached on many topics in negotiations.  That hope collapsed quickly on Tuesday when the US launched new strikes on Iran. Iran called the strikes a violation of the ceasefire that had been in place. Then on Wednesday, reports began noting progress toward ending the crisis, with an increasing number of ships starting to move through the Straight.  Prices dropped sharply on renewed optimism. Thursday brought another reversal.  Iran’s Revolutionary Guard struck a US airbase in retaliation for another US strike and prices jumped again. By Friday morning, the two sides appear to have pulled back from the brink of military escalation. Treasury Secretary Bessent confirmed the US and Iran are within reach of a ceasefire extension agreement, but said Trump has not yet approved it. The statement from Bessent sent oil down nearly 2%. If Trump signs, analysts believe prices will fall sharply next week. If he doesn’t sign, prices will rebound higher.  I don’t believe that prices will collapse if Trump signs the deal.  I believe that the signing is already priced into the current trade.  However, if ships start flowing at full capacity with 100% freedom, I do believe prices will fall further.

This week marks exactly three months since the crisis began.  A handful of tankers did exit the strait this week — two supertankers and an LNG vessel moved through, appearing to head for India and China.  Any movement is being watched closely.  Jet fuel trade continues to be completely disrupted globally. Some smaller producers like Argentina, Brunei, and Gabon have quietly picked up market share that Gulf producers can no longer fill. Europe is increasingly worried that the problem is shifting from price to physical availability, specifically calling out jet fuel as the most vulnerable product.

On the domestic supply front, the weekly inventory data was clear. Commercial crude stockpiles fell another 3.3 million barrels, putting them about 2% below the five-year seasonal average. Gasoline is 6% below average. Diesel is 11% below average.  These numbers are important when heading into summer. Refineries are running hard at 94.5% of capacity, and crude imports are running 7% below year-ago levels as the effects of the Strait closure continue to affect the global supply chain.  We have enough supply, but the world market is bidding a higher price, hence extra supply leaving the US.

Meanwhile, the Wall Street Journal reported this morning that Americans are falling behind on their $1.25 trillion credit card bill. Middle-class families are starting to slip into what is called “survival debt”.  This is borrowing just to cover basic expenses. High gas prices are a direct contributor, and the longer the Strait stays closed the worse debt piles on.  And another interesting economic nugget this week.  About one million potential new car buyers have also exited the market entirely due to high fuel costs, rising interest rates, and sticky inflation.  Cracks in the greater US economy are starting to take shape as we roll into summer.

Finally, some genuinely good news on the Chicago Spot Market front! Chicago finally sold off as refineries came back online this week. Diesel took a dramatic drop and gasoline fell in tandem with crude oil. We are going into June with much better pricing than we have seen in weeks. I expect lower prices at the pump next week for both gasoline and diesel, and as long as crude price holds steady, I expect those lower prices to hold.

Propane is a different story. Prices have not budged at all, even with crude oil dropping sharply this week. The EIA reported a surprise inventory draw as record exports continue. Inventories are skipping along near-record levels, but they are declining during the time of year when they should be building for winter. I do not expect to see propane prices move much lower for summer fills.  Also, next season’s heating contract numbers have been released.  Please call the office to lock-in your pricing for the upcoming season!

As always, if you have any questions, please feel free to give us a call. Have a great weekend!

Best regards,

Jon CrawfordSources: Bloomberg, Reuters, Wall Street Journal

A Lot Going Into Memorial Day Weekend

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Happy Friday!

This was a week that had everything: drone strikes, a near-restart of the war in Iran, a record SPR draw, cautiously optimistic peace signals, and a Chicago market that continued to swing in record numbers.  WTI is looking to close below $100/barrel for a weekly loss.

The week started with a surprise on Monday when drones struck a UAE nuclear facility over the weekend and Saudi Arabia intercepted three more headed its way. Oil climbed to its highest level in two weeks as Trump warned Iran the that the clock is ticking.  Pakistan shared a revised Iranian peace proposal that Trump immediately dismissed. The IEA delivered a very strong message, saying oil inventories worldwide are declining so rapidly that only a few weeks of supply buffers remain. Iraq confirmed some of the report saying that the country exported only 10 million barrels through the Strait in April compared to about 93 million in a normal month.

Tuesday brought the week’s biggest whipsaw. Trump posted overnight that he had called off a strike scheduled on Iran for that morning, saying Gulf allies asked for more time.  WTI price took off. The pause was clearly temporary.  Trump reiterated that the US is ready to resume attacks if a deal isn’t reached.  Both sides released their positions again.  Iran wants an end to all attacks, a full US military withdrawal, and war reparations. The US wants Hormuz reopened, the nuclear program stopped, and proxy attacks halted, with no reparations and no withdrawal. Three months in, and still neither side is bending.  And the US  reversed course and extended the Russian oil sanctions waiver for another 30 days for poor countries that literally cannot access Gulf oil right now.  The waiver is meant to try and help nurse the world oil supply condition while a deal with Iran hopefully gets done.

Wednesday brought more of the same. Trump posted the war would end very quickly.  WTI slipped more than 2 percent on the news. Although three super tankers made it through the Straight, but there is no immediate relief in the future.  Iran established a designated transit route running about 10 vessels a day — a fraction of normal, but better than near zero. Saudi Arabia’s data showed crude exports hit a record low going back to 2002, and the IEA calculated that supply losses caused a 246 million barrel drawdown in global inventories in March and April combined. Back at home on the supply front, EIA report firmed up any major price drop.  Crude inventories fell 9.1 million barrels, the single largest weekly draw of this entire crisis, with gasoline dropping another 5.8 million on top of that.

On Thursday, oil climbed more than 1 percent as Pakistan pushed hard to get both sides back to the table, Iran said it was reviewing Washington’s latest responses, and Trump said he was willing to wait a few days for the right answers. But then Iran’s Supreme Leader has ordered that the country’s near-weapons-grade uranium stockpile cannot be sent abroad. This is a deal breaker.  And even if a deal were signed tomorrow, leaders have said full Hormuz flows won’t return until at least early 2027. The IEA continues to call this the largest energy crisis in history. Pump prices are now about 45 percent higher than they were in late February. AAA expects a record 39 million Americans to hit the road this Memorial Day weekend, but a GasBuddy survey found 35% say rising costs are already causing them to take fewer road trips.

Today, the US and a senior Iranian source said that gaps have narrowed, but the two sides remain stuck on Iran’s uranium stockpile and long-term control of the strait.  As the UAE continues to beat the drum that once the Straight opens, they will pump at full speed, they made another surprising announcement this week.  They are close to completing an alternative pipeline to export crude oil outside of the Straight.  The pipeline will help secure UAE access to the world market regardless of what happens in Iran.  One piece of good news was that forecasters are calling for a below-normal hurricane season, which takes some pressure off Gulf Coast production and refinery infrastructure during the busy summer months.

In Chicago, the spot market continued to be a volatile nightmare this week. Even with crude losing almost ten dollars a barrel, Chicago did not follow. Diesel differentials swung over 80 cents a gallon again. Refiners are keeping their cards close to the chest as month-end approaches, which makes retail pricing very difficult. I am hoping we are out of the woods in early June. Chicago basis still has up to 50 more cents to give back versus the Group Spot market, and I do expect lower diesel prices next week if crude and NYMEX hold steady. Gasoline is a different story.  It continues to run much weaker than diesel, and I expect flat or lower gasoline prices for the holiday weekend.

Propane is not following crude lower. Inventories are staying essentially flat during what should be the normal seasonal build period. I continue to recommend filling your tank over the summer. I do not expect a blowout price drop this season.  And next season’s heating contracts should be out next week.

As always, if you have any questions, please feel free to give us a call. Have a great weekend!

Best regards,

Jon Crawford

Sources: Bloomberg, Reuters, Wall Street Journal

Holy Moses, The Amount Of Information Is Overwhelming

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Happy Friday!

This was another week where hope appeared on Monday, reality set back in by Friday.  Oil is trading near $104 a barrel as I write this after Trump announced overnight that the United States doesn’t need the Strait of Hormuz open. The comment sent prices up more than 2% to start the day.  The pattern of recent weeks has become very familiar.  Peace talks raise hopes, oil drops, then talks go nowhere and oil shoots right back up.  And again, there was a ton of information released this week for discussion.

The week started where last week left off, with Trump calling Iran’s response to the latest US peace proposal unacceptable on Sunday, erasing most of the prior week’s losses in a single Monday session. The Saudis delivered the week’s most surprising announcement on Wednesday.  Saudi Arabia has been secretly conducting its own military strikes on Iran throughout this war.  The attacks from the kingdom were never publicly acknowledged, including a strike on an Iranian refinery that took out a significant portion of production. Combined with the fact that the UAE has also been quietly striking Iran throughout the conflict, this war has far more active participants than news first suggested.

The announced supply numbers continued to deteriorate this week. The IEA dropped a major revision this week, now projecting a global supply deficit for all of 2026.  Just last month the IEA was projecting a surplus. The EIA changed their supply call as well.  They believe that the Middle East offline output which is currently 10.5 million barrels per day in Apri will rise to 10.8 million barrels per day in May. In addition, satellite images of Iran’s main Kharg Island export terminal suggest shipments have stopped completely in recent days.

Official US inventory data from the EIA confirmed another sharp week of draws: crude stockpiles fell 4.3 million barrels, gasoline dropped 4.1 million barrels and is now 5% below the five-year average, and diesel inventories remained flat but are running 9% below its five-year average. Gasoline imports into the East and West Coasts fell roughly 50% week over week, which tells you how hard it has become to source foreign supply.

There are a few market conditions that are keeping oil prices from blowing out higher: record US oil exports which hit an all-time high of more than 14 million barrels per day late last month, and Strategic Petroleum Reserve drawdowns at a record pace of 1.22 million barrels per day, and China cutting imports and instead using its massive reserves to resell barrels to European and Asian buyers. None of these cushions are sustainable. China’s selling can probably continue for only about three more weeks. When these three buffers run out, prices will need to move higher. If inventories keep falling at the current pace, crude could spike to $150 a barrel. I hope beforehand we find some solution to moving global crude supplies.

Trump’s two-day summit with Xi Jinping in Beijing produced nothing regarding the war in Iran. But both leaders agreed the strait must be open and Iran cannot have nuclear weapons.  However, neither side offered a path to solving the issue. Xi expressed interest in buying more US oil, but China has not imported a single barrel of American oil since May 2025 because of the 20 percent tariffs.  Then after the summit, Iran made clear on Friday that Tehran is not feeling any new pressure.  They have no trust in the US and will only negotiate if Washington is serious.  In addition, they announced that returning to fighting is on the table.

American economic data was not great this week either. Consumer sentiment recently hit a record low. US consumer inflation hit 3.8 percent in April, driven almost entirely by energy costs. Now Trump is backing a suspension of the federal gas tax, which would shave about 18 cents off the current national average of more than $4.50 a gallon. The move is posturing and will do nothing to put an influential amount of money in the hands of consumers.  Kevin Warsh was confirmed as Federal Reserve Chair and took over immediately this week.  The situation he is facing is not great.  Inflation is near 4 percent, the economy slowing, and an oil shock with no end in sight.  Traders are waiting to see how Warsh will approach the current situation. And lastly, both the EIA and IEA this week cut their global oil demand forecasts due to predictions that consumers and businesses will purchase lest products at these prices, and airlines are struggling to keep operating at these higher prices and supply crunch. If demand drops, that would be the first demand drop since COVID.

On the bright side, Gulf producers are building around the Hormuz problem for the long run. The UAE announced Friday it will accelerate construction of a new pipeline that will double its export capacity, completely bypassing the strait, by 2027. Saudi Aramco ramped up its East-West pipeline to 7 million barrels per day in just eight days, keeping roughly 60 percent of the kingdom’s pre-war export capacity flowing.

One last geopolitical nugget.  Ukraine also kept the pressure on global supply from a different direction, having doubled the number of Russian refineries struck with drones this year.  Russia’s April oil output fell 460,000 barrels per day as a result.  And Russia continues to pummel Ukraine with large scale attacks.  Sometimes we forget about the war in Ukraine.  However, the war is still affecting oil markets and needs to stay on the radar.

Chicago had another wild ride this week.  After diesel differentials shot up over $1.00/gallon at the end of last week and then collapsed, we had a near-exact repeat this week. Prices jumped over 60 cents/gallon for two days and then came back down. The volatility has made pricing for retail an absolute nightmare.  I am optimistic that the worst is behind us. Three refiners have completed their turnarounds and are ramping up production. Another one was able to fix their coker unit rather than replace it. The remaining issue is the largest refinery in Chicago is still not at full capacity due to both electrical issues from a prior power outage and an employee strike. I do believe we will see one or two more smaller differential drops in diesel as the market stabilizes. It looks like for now diesel prices have peaked. Gasoline differentials have also stabilized.  I do expect diesel pump prices to start coming down from their record highs.

Propane has continued to hold fairly steady, but futures pricing has started to move higher along with crude. I highly recommend filling your tank now if you can. I believe we are potentially at the lowest price for the summer, and there is a greater probability of prices moving higher than lower. I also strongly recommend contracting for next heating season. The unpredictable volatility in global markets is not going away anytime soon, and every customer should have their heating costs locked in for budget purposes.  The potential inflation in the broader economy looks very high so it’s best to have your heating bill protected.

As always, if you have any questions, please feel free to give us a call. Have a great weekend!

Best regards,

Jon Crawford

Sources: Bloomberg, Reuters, Wall Street Journal

Buying And Selling The News Instead Of Fundamentals

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Happy Friday!

What a week. Oil opened Monday near $105 a barrel on fears the US had been attacked in the strait, collapsed nearly 10 percent by Wednesday on peace talk hopes, and is finishing the week around $94 as fighting continues despite an active ceasefire. The market has been driven entirely by headlines, and every one of them contradicted the last. The underlying supply situation has not improved, and I do not believe a peace deal, if one comes together, solves the physical problem quickly. But the market is trading on hope right now, and hope is moving prices more than fundamentals.

Monday set the tone. Iran’s state media reported two missiles struck a US warship near the entrance to the Strait of Hormuz, pushing WTI sharply higher before the US denied any ships were hit. At the same time, Trump launched what he called “Project Freedom”, an effort to guide commercial ships stranded in the Persian Gulf out through the waterway. Iran immediately responded with missile and drone attacks, striking an oil terminal at the UAE’s Fujairah port and setting it ablaze.  The ceasefire that has been in place since early April is hanging by a thread. By Tuesday, the US and Iran seemed on the brink of a dangerous new phase of this war.

Then Wednesday flipped everything. A source from Pakistan said the two sides are working toward a one-page framework to end the fighting. The US expected to hear Iran’s response on key sticking points within 48 hours.  This is the closest to a deal since the war started in late February. WTI dropped to around $92. Trump also quietly pulled back “Project Freedom” sending a signal the administration may be clearing the path for diplomacy.

Thursday added more fuel to the optimism: Saudi Arabia reported than an understanding had been reached to ease the naval blockade in exchange for a gradual reopening of the Strait.  Israel also reported Iran agreed to transfer its stockpile of highly enriched uranium to a third country. Neither report was independently confirmed, but together they were enough to push oil prices lower.

Even with a deal in the works, the supply picture does not fix itself overnight. Even if the US and Iran sign something in the coming days, it will still take weeks for oil shipments to resume flowing out of the Persian Gulf. Ships need to move, ports need to reopen, and crews need to feel safe sailing through the strait again. The physical supply crunch does not end the moment a deal is announced. Some early signs of quiet movement are encouraging.  A handful of UAE tankers were reported sailing through the strait with their location tracking systems turned off.  But this is far from normal traffic.

US gasoline stockpiles are falling sharply and could reach the lowest level for this time of year in modern records by the end of August. US refiners are prioritizing diesel and jet fuel production over gasoline because margins are better, which is squeezing consumer supply even further. The EIA report this week included a 2.2M draw in crude inventories, a 2.5M draw in gasoline inventories, and a 1.3M draw in distillate inventories.

On the supply response front, US producers are finally starting to move. Diamondback Energy announced they will increase drilling, expecting as many as 30 additional rigs to be added in the Permian.  This is roughly a 10 percent jump. Continental Resources and Exxon have also committed to production increases. Trump also signed a presidential permit for the Bridger Pipeline expansion that would eventually carry about 1.1 million barrels per day of Canadian crude to Wyoming.  Libya’s Zawiya refinery near Tripoli was forced to shut down this week after attacks struck multiple locations inside the plant.  The closure removed 120,000 barrels of crude oil per day of global supply.  Adding to the supply picture, China slashed its April oil imports by roughly a quarter compared to pre-war levels, but its state-owned companies have been quietly reselling some of those cargoes to European and Asian buyers, which has helped ease some of the supply crunch overseas.

This morning’s April jobs report came in much stronger than expected. The US economy added 115,000 jobs, more than double the 55,000 analysts were forecasting.  The unemployment rate held steady at 4.3 percent. The report is a reminder that even with $4.50 gasoline and a war disrupting global energy markets, the US labor market is still holding up reasonably well. Hybrid vehicle sales jumped 37 percent in the two months since the war began, which tells you how consumers are adapting. But there are real cracks showing.  Consumers are starting to report cutting back on food and everyday purchases to cover fuel costs.

The Chicago spot market was a disaster this week and I need to address it directly. Gasoline and diesel prices collapsed last Friday and Monday after news broke that one major refinery was back online after a power outage and the refinery with the broken coker would return by end of May instead of June. That was great news and a sigh of relief. Then Thursday happened. A single refiner purchased every open diesel barrel in the Chicago market in one move, sending diesel prices up 60 cents as traders scrambled frantically to cover positions. Friday brought more of the same as traders continued covering barrels heading into planting season. Until the current three refineries that are in maintenance fully come back online, the Chicago market is going to be a volatile rollercoaster. Even though diesel prices pulled back at the pump recently, I expect diesel prices to climb back toward $6 a gallon unless something unexpected changes. Gasoline prices moved lower this week and I do not expect pump prices for gasoline to increase in the near-term.

Propane sold off a bit on the Iran deal news, but the drop was not substantial. Futures buying is picking up as next season’s heating contracts begin to develop. Prices firmed back up after the EIA reported another draw of over 1M barrels in propane inventories due to exports continuing at record levels. I am still not predicting prices for summer fills to go significantly lower. Next season’s heating contracts should be released near end of May or early June.

As always, if you have any questions, please feel free to give us a call. Have a great weekend!

Best regards,

Jon Crawford

Sources: Bloomberg, Reuters, Wall Street Journal

Chicago Blowout

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Happy Friday!

What a week. Oil touched its highest price in four years on Thursday when WTI briefly spiked to $112 a barrel on fears the United States was preparing a new military strike against Iran, only to pull back sharply today after Iran sent a fresh peace proposal to Pakistani mediators. As of this afternoon, WTI has fallen back toward $102. That is still a large range for a single week, and it shows exactly what this market has been — volatile moves in both directions, driven entirely by geopolitical events and announcements.

The week started with a setback. Trump canceled his top envoys planned trip to Islamabad over the weekend after Iran’s Foreign Minister Araghchi left Pakistan before any direct talks could take place. Trump blamed the lack of structure in Tehran’s leadership. Monday brought a new Iranian proposal: reopen the Strait, end the war, nuclear issues set aside for now. Washington rejected it. Trump made clear the naval blockade stays in place until a full nuclear deal is reached, not just a strait deal. That gap between what Iran is offering and what the US is demanding has defined the entire week.

By Tuesday, the pressure on Iran’s side was becoming impossible to ignore. The US Navy blockade, in place since mid-April, has cut Iranian oil exports by roughly 70 percent.  Iran is running out of places to store what it cannot sell, with analysts estimating only 12 to 22 more days of available storage capacity. Once that runs out, Iran will likely have to slow or stop pumping entirely, potentially cutting another 1.5 million barrels a day by mid-May. The UAE added to the pressure by officially quitting OPEC on May 1, ending more than 50 years of membership. OPEC just lost its third-largest producer, and one with significant spare capacity. The UAE has made clear it plans to pump whatever it wants whenever the strait reopens, targeting 5 million barrels per day by 2027.  That is nearly double its recent OPEC quota! Some analysts are watching Kazakhstan closely as a possible next departure. A looser OPEC with less coordinated production control means more price swings ahead once this crisis ends, but there is a greater chance of lower prices than higher.

On Wednesday, an investigation found that Iran’s Revolutionary Guard Corps has quietly taken control of the country since the war began. When Supreme Leader Khamenei was killed on the first day, his son Mojtaba stepped in but largely approves decisions rather than drives them. The real power sits with a small group of IRGC generals who have their own financial resources and are far less concerned about Iran’s struggling economy. That matters a great deal for negotiations. The people now in charge of Iran are not the people most eager to make a deal, and every day of stalemate tightens the supply crunch further.

Thursday was the day the market came closest to breaking. A report that US Central Command was set to brief Trump on plans for a short, intense wave of airstrikes on Iranian infrastructure was released. WTI rocketed to $112, a level not seen since the months after Russia invaded Ukraine before pulling back to around $108 once no announcement followed. Jerome Powell’s final Fed meeting as chair also took place Thursday. The Fed held rates steady for the third straight meeting at 3.5 to 3.75 percent citing inflation from energy as the number one concern.

Today’s news out of Iran brought the first major market relief of the week. Iran’s new proposal reportedly includes more specific language around the strait than previous offers, along with a ceasefire and an offer to deal with nuclear issues separately at a later date. WTI dropped almost $4 on the news.  Trump responded by reiterating that the blockade stays until a full nuclear deal is in hand. The gap is still wide for a deal, but Iran sending a revised proposal after a week of escalating military pressure is at least a sign that both sides are still talking.

The Chicago spot market had an extraordinary week that I need to address directly, because it was driven by factors beyond just the Iran war. Diesel prices climbed almost $2 a gallon in a short period of time, setting a record for the fastest price increase we have seen in the Chicago market. Three refineries are currently in turnaround maintenance. One refinery lost a coker unit, which took out roughly 20 percent of its capacity and is likely to be offline for months. Another lost power. The combination of the Iran-driven crude price surge and these simultaneous local refinery outages created a short squeeze that pushed prices to levels I do not see coming down quickly. I expect gasoline to be near $4.50 a gallon and diesel near $5.50 a gallon to persist for some time, possibly through the end of May. One refinery is restarting and prices pulled back a bit today, so hopefully we have seen the peak, but I would not count on it just yet. Let’s keep our fingers crossed that the refineries in maintenance come back online without any additional hiccups.

Propane prices found their legs this week. Futures and spot prices all moved higher, and inventories experienced a surprising draw on Wednesday driven by a new record in exports. I do not expect exports to slow down any time soon, and that changes my summer fill outlook somewhat. I am no longer confident we will see significantly lower prices for summer fill compared to where we are for price today. That said, I still expect next season’s heating contracts to remain under $2 a gallon. The bigger picture on propane inventories remains very favorable.  Inventories are over 65 percent higher than this same time last year and over 35 percent higher than two years ago. Even with record exports, there is an extremely low scenario in my opinion where propane faces the kind of short squeeze we are seeing in diesel. Propane remains by far the most stable and affordable energy product in this environment, and that story has not changed.

As always, if you have any questions, please feel free to give us a call. Have a great weekend!

Best regards,

Jon Crawford

Sources: Bloomberg, Reuters, Wall Street Journal