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The Energy Report

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


A Day to Remember. The Energy Report 09/11/2026

As we pray and remember the terrorist attacks of September 11, we are reminded that they were not only attacks on buildings, but attacks on humanity, decency, and our way of life. We are also reminded that the fight against violent extremist ideology continues today. Oil prices rose after reports that Iran-backed Houthi rebels reached the strategic Yemeni island of Perim in the Bab el-Mandeb Strait early Friday, according to four Yemeni government sources. The Houthis also claimed control of the Bab el-Mandeb Strait, while an unconfirmed report of a Houthi strike on Saudi Arabia’s East-West Pipeline helped trigger a panic spike in crude prices before the market retreated. In light of the events of the past 48 hours, and in remembrance of the victims of September 11, we must confront this evil wherever it persists. We owe that to the victims, and we owe it to the future of humanity. We cannot stand idle while violent ideologies and their sponsors continue to threaten the civilized world. Nearly 47 years after the Iranian Revolution and a quarter century after September 11, it is time to defeat the ideology of terror sustained by the Iranian regime and its proxies.

The headlines came in waves, and the tape told the story in real time. Overnight Wednesday into Thursday, Iran claimed it had hit ten ships near Hormuz after U.S. strikes on five Iranian tankers; on while many question that tall tale vessel counts through the Strait fall into single digits according to some reports.

Then the Houthis piled on: a large missile-and-drone barrage earlier in the week against southern Saudi energy sites in Abha, Jazan, Najran and Khamis Mushait wounded 73 people, forced some Aramco operations to halt, and reminded the market that the war is no longer just a Hormuz story. Thursday’s kicker was the seizure of Mokha, the Red Sea port sitting just north of the Bab el-Mandeb.

That is when WTI punched through $100 for the first time since May and Brent printed as high as $108–$109 before settling $107.63, up more than 6 percent on the day.

Overnight into Friday, four Yemeni government sources told Reuters the Houthis had reached Perim Island itself, and unconfirmed satellite fire detections and a long smoke plume along the route of Saudi Arabia’s East-West Pipeline — the 7-million-barrel-a-day Petroline that is Riyadh’s insurance policy when Hormuz is choked — triggered the panic spike before cooler heads and an FT report of possible temporary Hormuz shipping talks pulled prices back. The IEA’s Friday reminder that Saudi crude supply collapsed 2.3 million barrels a day in August to 6 million, the lowest in more than three decades, kept a floor under the market.

On the flip side Blomberg reported that Iran’s oil exports remain severely constrained almost two months into a renewed US naval blockade, deepening the Islamic Republic’s economic crisis and tightening global crude markets.

Satellite images haven’t captured any supertankers loading at Kharg Island, the country’s main oil export terminal, for at least two weeks, and tanker-tracking data indicate exports were barely a fraction of pre-war levels in August.

The slowing shipments are cutting off revenues for an economy already squeezed by a collapsing currency and surging inflation, and have propelled crude futures above $105 a barrel.

Distillates are still doing the heavy lifting both latterly and figuratively as diesel cracks have already printed record territory at $112.59 a barrel U.S. retail diesel is at or near $6 a gallon, and the 3-2-1 remains bloated because refiners are being paid a fortune to make ULSD while inventories stay historically tight.

Friday’s fade does not undo a roughly 13 percent weekly advance or the fact that two chokepoints plus a wounded Saudi export system now sit on the same map. If China keeps buying and U.S. runs stay strong, this $100-handle is not a one-day wonder — it is the market pricing a longer disruption and a diesel market that still has more room to squeeze.

And I’ve said before the diesel squeeze while caused by turrets also been caused by short sight sighted energy policy around the world and tell the world by trying to but climate change was an existential threat instead of facing up to the real threats like the terrorists in Iran and the terrorists who the rebels we’ve been put into this for the titius American but having said that it is time to stand up to this because the situation was only going to get worse if we stood by and did nothing with this Iranian regime.

And while I hear from some people that said that Iran wasn’t really a threat and that they weren’t close to get teen a nuclear weapon probably should think back 25 years when we took terrorism for granted it led to the most heinous on our country an evil attack because we failed to acknowledge the real risk of the evil that we were confronting that’s what I wish that you all will join us in a prayer for peace add an end to the terror threat he prayed for all of those who have lost their lives in the worst fighting terror can all the victims not only by al Qaeda and the Iranian regime but all forms of terror murders of Christians slaughters around the globe.

Still, we know oil supply will have some challenges. The IEA has said it will take into 2027 to rebuild global inventories after the Hormuz shock. Their first look at 2027 showed supply surging by about 8 million b/d while demand only grows about 2 million b/d — a big surplus later, but they also warned stocks could still sink to historic lows before that surplus actually arrives.

On the flip side, the EIA reported the U.S. is producing a record amount of crude oil — 13.9 million barrels a day in the latest week (13.947 million b/d for the week ended Sept. 4). EIA’s STEO has 2026 U.S. crude averaging a new annual record of 13.8 million b/d.

We have also been exporting a record amount of crude and products this year. Combined U.S. crude-plus-product exports have been running near 11.9 million b/d. Crude exports have swung week to week — last week they dropped to 3.4 million b/d after 4.5 million the week before — but earlier this year, during the supply crunch, crude exports hit record highs in the 5.7 million b/d range on a monthly basis.

Commercial crude inventories came in at 424.1 million barrels, which is basically right in line with the five-year average. Diesel and distillate stocks built by 2.1 million barrels to 106.3 million, but they are still about 13% below the five-year average. That means diesel remains much tighter than crude, and it is still the product to watch if winter demand picks up or exports surprise to the upside. Gasoline stocks stood at 206.9 million barrels, about 5% below the five-year average.

Gasoline demand was not exactly booming, but it was still holding up fairly well given prices. The four-week average for product supplied was 8.8 million barrels a day, down about 1.4% from a year ago. Last week came in at 8.55 million barrels a day. Total products supplied over the past four weeks averaged 20.1 million barrels a day, down 3.7% year-over-year. U.S. barrels are doing the heavy lifting — record production, heavy exports — while global stocks still have to be rebuilt into 2027. Crude looks balanced versus the five-year average. Diesel does not. That’s the split the market still has to respect. The answer is blowing in the wind.

Why did natural gas get a bigger-than-expected injection? The EIA reported a +40 Bcf build for the week ending September 4, taking working gas to 3,254 Bcf. That beat the roughly +31 Bcf consensus and came in well below the five-year average injection of about +52 Bcf for the week. Stocks sit 4.8% above the five-year average but 79 Bcf (2.4%) below year-ago levels.

Celsius Energy said the larger-than-expected (though still relatively bullish) +40 Bcf injection was driven by the combination of strong wind generation (+27% week-over-week) and near-record production. Wind displaced a meaningful chunk of power-burn demand. They note wind generation has slackened some this week, which should tighten the imbalance for the next report, even as production has stayed strong.

And Fox Weather on the heat outlook still says that the early-September heat dome that baked the Plains and South has eased in the Midwest and East, with cooler air and weekend storms moving into the East Coast. Yet Fox Weather warns that the heat is not gone. The South, southern Plains, and parts of Texas still look seasonably hot into next week, with heat-index values remaining uncomfortable. That should keep some late-season cooling demand in play even as wind output has come off its recent peak. Watch the next EIA print for whether slacker wind plus lingering southern heat starts to bite into the surplus and download the Fox Weather app. “We will never forget. God Bless our heroes of September 11th.”



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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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