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The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn@pricegroup.com


Strike the Letter E. The Energy Report 08/10/2026

Oil prices are a bit higher this morning, mainly because of disappointment that the Strait of Hormuz is not open yet and because of some of the demands Iran is making to stop attacking ships in an international waterway. This comes against the backdrop of continuing tensions between Ukraine and Russia and attacks on their refineries as well as a big drop in Chinese imports that have helped kept the market globally supplied as they’ve relied quite heavily on their strategic reserve. Still keep an eye on the diesel crack spread which is up over $5.48 today on these renewed concerns about the tight supplies of distillate supplies going into winter this seems to be the soft spot where people show their fear about the possibility of a cold winter in front of a potential Cold War in the Strait of Hormuz.

Apparently, Iran wants the United States to vow never to threaten Iran again in any way, shape, or form—or even insult Iran. Apparently, the Iranians do not like to be insulted. They are also demanding that we permanently end military aggression and action, stop the attacks against Iran and its regional allies—especially forces in Lebanon, Palestine, Yemen, and Iraq—and, while we’re at it, release all the money, pay reparations for what Iran calls imposed war aggression, lift all sanctions on Iran, release frozen assets unconditionally, and strike the letter E from the English language.

This list of demands seems more like a child’s wish list to Santa Claus than anything grounded in reality. Iran is trying to give the impression that it is in the driver’s seat in this conflict, yet the oil market remains unconvinced that the Strait of Hormuz will become a lasting problem. The back end of the futures curve continues to trade at a steep discount to the front end. And the possibility that the trump administration could create a huge economic collapse not only by reinstating A blockade but other financial sanctions that should bring the already the economy that’s already on its knees to full economic surrender.

President Trump is playing the long game with Iran — and he’s not shy about saying so.In comments over the weekend, Trump made clear Washington is “low-keying” any talks with Tehran. “We are only semi-negotiating with them,” he told Axios. “We are just watching Iran with its huge inflation and the fact they have no money.” The message is economic pressure is doing the heavy lifting, and there’s no rush to escalate the military confrontation further. Tehran, for its part, is pushing back hard on the optics. Iranian officials insist they are not engaged in direct negotiations with the United States, framing any exchanges as limited messages through intermediaries. Classic Iranian playbook — deny, delay, demand more.

Meanwhile, traders on Polymarket are betting the renewed U.S. naval blockade of Iranian ports and coastal cities won’t last much longer. With Trump signaling he’s content to let the economic squeeze work and avoid another round of kinetic action, the market is pricing in an eventual end to the blockade as the path of least resistance and with markets suggesting a 67% chance that d .

The President is choosing patience and economic warfare over more bombs. Iran is still talking tough and refusing to call it negotiations. And the betting crowd thinks the blockade is closer to the exit than the entrance. Oil remains the ultimate scoreboard — and right now, the pressure is on Tehran’s wallet. Bloomberg’s reporting that Ukraine has agreed not to go after certain non-Russian oil tankers and key Black Sea infrastructure used to export Kazakhstan’s crude. That’s very nice of them.

According to an anonymous U.S. official, Ukraine has agreed to avoid certain non-Russian oil tankers and key Black Sea infrastructure used to export Kazakh crude. Kyiv has also set up contacts so commercial shippers can share vessel details and get guidance on safe passage. The agreement follows late-July talks with U.S. officials and could help restore oil flows after recent attacks near the Caspian Pipeline Consortium terminal in Novorossiysk rattled operators. Ukraine will leave CPC facilities and non-Russian ships alone as long as they are not sanctioned, carrying Russian cargo, or Russian-owned. But Russian refineries remain fair game. On August 8, Ukraine said it struck the Ilsky and Syzran refineries, with fires reported at both.

The big picture for oil is that the market remains cautiously optimistic the war will end, much like the odds on Polymarket suggest. The near-term risk is tight diesel and heating oil supplies heading into winter. With inventories well below normal, any disruption could send crack spreads sharply higher—a clear signal for refiners to boost output and rebuild supplies before colder weather arrives.

Fox weather reported a heat wave, and maybe natural gas finally woke up. Natural gas futures just punched higher this morning and traders are scrambling. September natural gas is trading $2.73–$2.76, up 7–10 cents (2.5–3.8%) from Friday’s $2.66 settlement. After five straight weeks of selling, the bears just got a dose of reality from Mother Nature. Let’s go straight to the numbers that matter. EIA storage as of July 31 came in at 3,117 Bcf — a solid +33 Bcf build. We’re still 12 Bcf under last year but a comfortable 195 Bcf above the five-year average. Production is humming near record levels in the Lower 48, roughly 110–111 Bcf/d. Supply is not the problem. Never has been this summer. The problem — or the opportunity — is demand. And demand is waking up. Fox Weather and the major models (GFS and ECMWF) flipped hotter over the weekend.

A strong ridge is locking in across the West, South, Southeast, and into the Midwest and Plains. Heat indices are pushing into the mid-90s to 100°+ with humidity. That means more air conditioners, more power burn, more cooling degree days. Exactly the late-summer setup that can force short-covering even when storage looks comfortable. I’ve been saying it for weeks: the lid on prices is high production and above-average inventories. The floor is heat. When the hotter model solutions verify, the shorts get nervous and gas pops. That’s exactly what happened this morning.

LNG feedgas is also lending a hand, running near 18.5 Bcf/d. Global LNG tightness (yes, still watching the Strait of Hormuz noise) keeps a bid under the complex, but the real catalyst right now is domestic power demand. This is the classic late-summer gas market: ample supply caps the upside, persistent heat provides the spark. If Fox Weather’s hotter pattern holds through the next 7–15 days, we can see more short-covering rallies. If we get cooler breaks, the bears will be back in charge.

Production remains strong and storage sits comfortably above the five-year average, but weather is the wild card—and right now it is leaning bullish. Watch the next EIA storage report and keep checking the forecast models. I recommend the Fox Weather app because its clear, timely forecasts and graphics can help you track the heat that moves this market.

You also need to stay tuned to the Fox Business Network because what other network in America is invested in you you should also finally get ready to open your trading account today you can also get my daily trade level you can call me at 888-264-5665 or you can e-mail me at pflynn@pricegroup.com oh all right all right I’m back I’m done I did the best I can do.



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Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

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Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

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