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The Energy Report

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


The Big Squeeze. The Energy Report 08/20/2026

President Trump is getting ready to put a major economic squeeze on the despot Iranian regime yet the market fears that this economic squeeze could squeeze oil supplies even more is putting a bid on oil. Squeezing the Iranian economy, already on of the most pathetic economies on earth will have at least some sober minded Iranians to ask the question what the heck are we fighting or in the first place. Diesel is also squeezed and a report that Ukraine said it hit a major refinery deep inside Russia and a small-size oil terminal on the Black Sea overnight. Bloomberg reported that Ukraine attacked the Taneco oil-processing facility in Russia’s Tatarstan region, about 900 kilometers (560 miles) east of Moscow, causing a fire at the plant, the General Staff in Kyiv said in a Telegram statement. The military forces also carried out a strike on the Tamanneftegaz oil terminal on Russia’s Black Sea coast, which also resulted in a blaze, it said.

In a Truth Social post, President Trump said he had provided the Islamic Republic with an opportunity to make a deal. “TRAGICALLY, for them, they have failed to take it,” he said. “Therefore, today, I am announcing the MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY! This will be Economic Warfare and Isolation on an unprecedented scale.” He also threatened “TREMENDOUS Economic Consequences” against any country providing a lifeline to Iran, including cash transfers, currency swaps, and shipping registries.

And after record-breaking crack spreads and the fact that refiners are being a handsome amount to keep the markets supplied with diesel and to a lesser extent gasoline reflects the fact that the United States is entering a new era of global energy dominance that will forever reshape OPEC and other energy players around the globe.

Still, we had oil prices rise even after reports from the Wall Street Journal and CNN and by market watchers that the U.S. military is coordinating tanker movements with Gulf partners while American fighter jets protect ships from Iranian drones and cruise missiles. Officials say recent U.S. strikes have degraded Iran’s surveillance capabilities and left Tehran with limited visibility into the corridor, according to Axios.

U.S. forces have quietly opened a protected shipping corridor through the southern Strait of Hormuz that now allows 15-20 tankers to transit each night. Officials report the operation is moving nearly 10 million barrels of oil per day—about half of pre-war levels—and is helping ease global supply disruptions. Here at the energy report we’ve been speculating on that for some time and we believe it’s been going on for many months that’s why many frustrated bullish traders could not figure out why we were not seeing any real oil shortages we talked about the historic workarounds we talked about releases from the strategic petroleum reserve and even as billions of barrels of oil production we’re lost we’re starting to find light at the end of the tunnel and if this final push against Iran make some structure realize that their struggle is hopeless perhaps we can move on to a new the surge in global economic growth )f course Iran is not winning favors with their neighbors after the UAE said it was halting all trade and financial transactions with Iran following fire from the Islamic Republic on Tuesday. That was due to an attack that Iran said hey I promise it wasn’t us it’s a false flag of course the UAE of course has taken many attacks from Iran so not only has the UAE left OPEC but they’re leaving they’re on again off again relationship with Iran leading the Iranian regime even more isolated Oil also got a boost after the Fed plano buy back some long-term bonds. The combination of maximum-pressure rhetoric and a key Gulf producer cutting ties added a fresh geopolitical risk premium but also lower yields adding bets that the Fed will not raise rates soon adding to oil demand expectations in the US.

The latest EIA weekly petroleum status report, covering the week ending August 14, shows that the U.S. energy supply machine is still running at full speed—even as geopolitical tensions continue to build.

U.S. crude production rose to 13.830 million barrels per day, up 25,000 from the previous week and an impressive 448,000 barrels above last year’s level. Lower-48 output held steady at 13.407 million bpd, while Alaska provided a little extra lift. The four-week production average now stands at 13.809 million bpd.

Crude exports made a big move, jumping 1.008 million barrels per day to 4.066 million. Add in lower imports, and net crude imports fell to 2.527 million bpd. The takeaway: the U.S. remains a major net exporter of crude and refined products, with net exports reaching 4.380 million bpd.

Commercial crude inventories, excluding the SPR, increased by 4.4 million barrels to 428.8 million. Meanwhile, the SPR declined by 5.3 million barrels to 293.4 million. Altogether, total crude inventories edged down 0.9 million barrels to 722.2 million n—still 101.9 million barrels below where they stood a year ago.

On the product side, the numbers were mixed but encouraging: Motor gasoline inventories increased by 0.7 million barrels to 209.4 million, though they remain 14.2 million barrels below last year’s level.

Distillate inventories fell by 1.5 million barrels to 105.6 million, leaving them 10.4 million barrels below year-ago levels. Jet fuel inventories gained 1.1 million barrels.

Propane and propylene inventories also moved higher, adding 2.0 million barrels.

US Refinery’s are the hero to the world as crude inputs climbed by 215,000 bpd to 17.395 million. Products supplied—a common demand indicator—fell by 1.097 million bpd to 19.538 million, as gasoline demand softened while distillate demand rose by 495,000 bpd. The big picture is straightforward: U.S. production and exports remain strong, commercial crude inventories are building modestly, and product supplies are mixed but still lean compared with last year. The Trump announcement and the UAE cutoff could add further upside pressure to prices if more countries join the isolation effort. Next, markets will be watching how quickly those secondary measures affect Iranian barrels—and whether U.S. exports can keep up this impressive pace.

Summer’s winding down, but the heat isn’t quite ready to let go of natural gas.

Natural gas futures are trading around $2.75 this morning, off about 2% after yesterday’s pop to $2.814. That bounce came as the market woke up to another round of brutal late-August heat. The September contract had been grinding lower on the idea that cooling demand would fade, but the South is still cooking. Today’s EIA storage report (week ending August 14) is the next test. Last week we injected 36 Bcf, taking working gas to 3,153 Bcf—still 198 Bcf above the five-year average but 25 Bcf behind last year. Analysts are looking for a much smaller build this time, somewhere in the 13–18 Bcf range. Heat that strong in Texas, Oklahoma, and the Lower Mississippi Valley eats into injections. If we come in on the low side of estimates, it trims the surplus a bit and reminds everyone that summer demand isn’t finished yet.

Fox Weather has been all over this heat dome. Extreme Heat Warnings are up across North Texas (105° in the DFW metro), Houston is staring at 100° with heat indices well over that, and the Southern Plains/Lower Mississippi Valley stay locked under that upper high through next week. Overnight lows aren’t giving much relief either. That’s the kind of stretch that keeps power burn elevated even as the calendar says summer is fading.

Production is still the other side of the story. We’re running at record or near-record levels—well over 111 Bcf/d in the Lower 48—and the EIA has us on track for another annual high in 2026. LNG feedgas is holding around 17.2 Bcf/d; Freeport’s maintenance wrap-up should add a little more pull soon. That combination of strong supply and comfortable storage is why prices have stayed in the $2.60–$2.80 range even with this heat.

The outlook as we head into the shoulder season is straightforward: cooling demand will drop once this heat finally breaks, and that should keep injections healthy into October. Storage is already in good shape heading into winter. The wild cards are how long this Southern heat lingers, whether we get any early tropical surprises in the Gulf, and how quickly LNG ramps once maintenance is done. Right now the market is treating this as a late-summer pause rather than a trend change.

American gas production remains the quiet giant here. We keep finding more, we keep exporting more, and we still have some of the lowest prices in the developed world. That’s the story that doesn’t change when the calendar flips.

Call me if you want to talk through the numbers or a trade idea: 888-264-5665. Also make sure you stay tuned to the Fox Business Network and make sure if you’re trading anything energy that you download the Fox weather app, you can e-mail me if you’re ready to open your account if you want the daily trade levels pflynn@pricegroup.com is e-mail address.



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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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Contact Phil at 1-888-264-5665 or pflynn@pricegroup.com.