It’s time to play the 70’s Trump Victory March YMCA as the Strait of Hormuz is set to open. Pull out the wide ties and disco music as is trading back to the nostalgic seventies as in 70 dollars a barrel as the deal to reopen the Strait of Hormuz is on track and already, we are getting reports on how quickly some hope to get things back to a state of almost normal.
In fact, Qatar whose natural gas production was one of the first energy casualties of the war announced today that they expect to restore half of their Liquefied Natural Gas (LNG) output a month after Hormuz opens and 80% of production within two months. That may be a signal that damage to infrastructure in the war might not be as bad as some feared raising hope that other producers and Non-OPEC producers can recover quicky. While there were strikes on facilities like Ras Laffan Yanbu, Fujairah, South Pars, various Gulf refineries, and depots, many reports indicate repairs are feasible in months rather than years for key sites. Keep In mind that not all production was wiped out; some facilities restarted after temporary shutdowns, and much disruption stemmed from logistics/shipping fears rather than irreparable physical destruction.
In fact, there is so much optimism that as Jaiver Blass at Bloomberg points out “ What goes into backwardation, can go into contango. He says that the time spreads of some key Middle Eastern crude grades have collapsed. from UAE is now in Contago, even before Hormuz formally re-opens with the signing of the deal, scheduled for Friday.’ That is an amazing vote of confidence in this smaller market that the tide is turning and building price incentive to raise output and start to refill coffers. That means that Gulf producers, including the UAE, are locked and loaded to ramp up exports in a hurry. With restored routes through the Strait of Hormuz and solid bypass infrastructure already in place, they can turn on the taps fast once Friday’s deal is signed.
This setup points to price stabilization with real upside potential. Sure, near-term pressure from returning barrels is coming, but that’s more than offset by growing optimism on demand recovery — and the reality that any supply flood won’t be unlimited. Pipelines and infrastructure bottlenecks still matter and will keep the flow in check.
is holding steady near key support as we approach our near-term downside target of around $67 per barrel on WTI. Once that level is tested, we expect prices to edge higher, driven by growing demand expectations heading into the summer driving season and broader economic activity.
At the pump, the good news for consumers continues and diesel prices are trending lower. Diesel spot prices have now fallen to their lowest level since March, according to GasBuddy’s Patrick DeHaan. The national average for regular unleaded is also on track to dip below $4.00 per gallon by next week. Here’s the latest AAA national average breakdown: Regular: $4.044 (down from $4.065 yesterday, $4.161 a week ago, and $4.517 a month ago) Mid-Grade: $4.540 (down from $4.545 / $4.663 / $5.006)Premium: $4.923 (down from $4.932 / $5.041 / $5.381) Diesel: $5.185 (down from $5.197 / $5.317 / $5.652) E85: $3.122 (down from $3.135 / $3.223 / $3.650)
Fox Weather reports that the first Atlantic tropical storm could form near Texas and bring several feet of rain to the South. While southeastern Texas bears the brunt of the initial tropical deluge today, the FOX Forecast Center warns that the core of the catastrophic flood threat will shift progressively eastward starting Wednesday.
As Invest 90L tracks along the upper Texas coast and pushes inland, the core of the steering currents will pull that massive, Pacific-fed moisture plume right along with it. futures are trading around the $3.15–$3.18 range at Henry Hub this morning, showing modest resilience as the market transitions into peak summer cooling season. After averaging $2.94/MMBtu in May (up from April), prices have edged above $3.00 on warmer forecasts and rising power burn, though ample production and healthy storage injections continue to cap upside. Now the big weather wildcard is Invest 90L (with potential to become Tropical Storm Arthur) is dumping heavy rain across Texas and the Gulf Coast, with flash flooding already reported in Houston and risks of 4–10+ inches in spots through mid-week. Governor Abbott has activated emergency teams.
For Nat gas power burn likely tempered with Heavy clouds, rain, and cooler/wetter conditions can suppress air-conditioning demand in Texas (a massive gas-consuming region via ERCOT). This is the opposite of a scorching heat dome that would spike cooling needs and gas-fired generation. Outages from flooding could also temporarily cut industrial and residential power use.
Flooding risks to infrastructure, pipelines, or LNG terminals (like Freeport) could have localized effects, though Texas nat gas systems are generally resilient in summer tropical setups compared to winter freezes. Any production or export hiccups would be short-lived. This storm is more likely to act as a near-term headwind to nat gas demand rather than a booster. It interrupts the building heat narrative that traders had been pricing in for late June. However, once the system moves out, hotter/drier conditions could quickly rebound power demand, especially with ERCOT bracing for potential summer peaks near 92 GW+ driven by heat, data centers, and economic growth so stay keep your Fox Weather ap handy or call me.
Now it’s dark of night. In an exclusive report, The Wall Street Journal writes that “As tankers ferry sanctioned oil from Iran and Russia around the world, their criminal owners are using a mishmash of digital tools to control crews and cover their tracks. The practices, discovered by U.S. Coast Guard cyber teams, have left ships in the so-called dark fleet exposed to bad actors who could use those weaknesses to cause an explosion or oil spill. The Coast Guard’s discoveries, which haven’t been previously reported, paint a picture of criminal bosses skimping on physical-safety measures while relying on information systems that could be exploited or hacked, making some tankers far more dangerous to the environment, to other mariners and to the crews on board than previously known.
“We’ve known for years that the dark fleet posed significant physical risks, because we knew they were operating old ships, they weren’t maintaining them,” said Rear Adm. Jason Tama, head of the Coast Guard’s Cyber Command. “But what we didn’t know until these boardings was what type of cyber risks were aboard these ships.”
With the U.S. and Iran on the verge of officially signing a deal to end the war and reopen the Strait of Hormuz, analysts say dozens of dark-fleet vessels stuck in and around the Persian Gulf could resume their illicit trade, significantly adding to the number of tankers being pursued by the U.S., and putting more potential ticking time bombs back out on the ocean. Yikes must read.
