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The Energy Report

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


Call Out the Bunker Buster. The Energy Report 03/31/2026

Yesterday, I suggested that Iran’s defiance—highlighted by a leaked video of underground mine-laying boats—could signal to the US military that it’s time to consider using bunker busters. Well today the US did exactly that.

After a sharp panic oil rally following the official settlement, which saw WTI surge from $102.88 to $106.86 on news that a Kuwaiti-flagged tanker, Al-Salmi, was struck and set ablaze, prices reversed overnight as reports confirmed the fire was extinguished and no injuries occurred. Meanwhile, the US deployed 2,000-pound bunker buster bombs, destroying a large ammunition depot in Isfahan, Iran, according to the Wall Street Journal. This action highlights that Iran’s supply of weapons will become increasingly limited as the war persists and the US continues to diminish their capacity to threaten their neighbors. Yet could we be closer to the end of the war in the than the beginning The Wall Street Journal is reporting that President Trump told aides he’s willing to end the U.S. military campaign against Iran even if the Strait of Hormuz remains largely closed, administration officials said.

The Journal says that “In recent days, Trump and his aides assessed that a mission to pry open the chokepoint would push the conflict beyond his timeline of four to six weeks. He decided that the U.S. should achieve its main goals of hobbling Iran’s navy and its missile stocks and wind down current hostilities while pressuring Tehran diplomatically to resume the free flow of trade. If that fails, Washington will press allies in Europe and the Gulf to take the lead on reopening the strait, the officials said.

This article is sending a strong signal that those who benefit most from the strait that they must help keep it open, the Trump administration is urging these heavy users (especially Asian importers) to step up militarily — deploying warships, providing escorts, or sharing the security burden — rather than leaving the United States to do all the hard work alone while they continue to enjoy the energy and fertilizer flows that power their economies. This comes a day after Iran Parliament said they are moving to enforce a $2 million “transit fee” or “penalty” on specific ships passing through the Strait of Hormuz, a key oil route.

These countries most reliant on the Strait of Hormuz for their oil, LNG, and fertilizers need to do more to not let Iran hold the strait hostage. Especially China (which grabs about 38% of all oil flows), India (taking in 15% of oil, more than half its LNG, and over 40% of essential fertilizers), Japan and South Korea (with more than 70% of their oil imports plus major LNG shipments), as well as Pakistan and Bangladesh (almost completely dependent on Qatari LNG and Gulf urea)—now find themselves in the hot seat! . It’s time for these nations to step up and take action, or risk feeling the full impact of Iran control that Strait.

By sending a strong signal that those who benefit most from the strait must help keep it open, the Trump administration is urging these heavy users (especially Asian importers) to step up militarily — deploying warships, providing escorts, or sharing the security burden — rather than leaving the United States to do all the hard work alone while they continue to enjoy the energy and fertilizer flows that power their economies. Because at the end on the day they need to ensure free navigation without the U.S. bearing the full cost and risk of protecting global trade routes that matter far less directly to American energy security.

Also, there is still talk of more war and peace, the best and the worst of times. On Monday, President Donald Trump warned Iran that the U.S. could destroy its key infrastructure if the Strait of Hormuz is not reopened immediately. While optimistic about ongoing talks with Iran’s new regime to halt military operations, he cautioned that failing to reach a deal soon would carry severe consequences. Meanwhile, Iran’s foreign minister, Abbas Araghchi, called on Saudi Arabia to “eject” U.S. troops from the kingdom, in the wake of an Iranian strike on a major American air base. Stressing that Iran views Saudi Arabia as a “brotherly nation,” Araghchi clarified that their military actions were aimed solely at “enemy aggressors” and pointed to the recent series of attacks on U.S. military installations.

And even as bunker busters shake Isfahan and the Strait of Hormuz remains a simmering flashpoint, there’s a diplomatic dance happening behind the scenes. President Trump revealed the U.S. has opened a line to Iran’s parliament speaker Mohammad-Bagher Ghalibaf. Pakistan’s Prime Minister Shehbaz Sharif on X, is offering Islamabad as a stage for peace talks. Pakistan’s said age: they’re “ready and honored” to host dialogue, if the U.S. and Iran agree, seeking a comprehensive settlement for the region.

Of course, for the traders the volatility is going to be very high as we continue to see swings based on headlines and perceptions of fear. Headlines across the country are touting the fact that gasoline prices have spiked to over $4.00 a gallon, but we’re still a far cry from the record high that we saw back in 2022. According to AAA, the national average for regular unleaded gasoline currently stands at $4.018 per gallon, with mid-grade at $4.541, premium at $4.904, and diesel at $5.454, while the lowest grade (often E85 or similar) sits at $3.149.

Yesterday’s averages were slightly lower at $3.990 for regular, $4.503 for mid-grade, $4.872 for premium, $5.416 for diesel, and $3.137 for the lowest grade. A week ago, those figures were $3.977, $4.485, $4.853, $5.345, and $3.150 respectively.

The sharpest moves have come over the past month, where regular unleaded has climbed dramatically from $2.982 to the current $4.018, mid-grade from $3.489, premium from $3.857, diesel from $3.758, and the lowest grade from $2.324. Compared to a year ago, when regular averaged $3.168, mid-grade $3.631, premium $3.991, diesel $3.598, and the lowest grade $2.602, the increases—particularly in diesel— For context on the extremes, the highest recorded national average price for regular unleaded reached $5.016 on June 14, 2022, while diesel hit its peak at $5.816 on June 19, 2022. The national average price for regular unleaded peaked at $5.016 on June 14, 2022, while diesel reached $5.816 on June 19, 2022.

Diesel price fluctuations and higher fertilizer costs may influence farmers’ crop choices. Today’s planting intentions report marks the start of the US planting season, and the market will use it to gauge farmers’ responses to rising prices. The e USDA Prospective Plantings (Planting Intentions) report is ‘s scheduled for release today, , at 11:00 a.m. CT (12:00 p.m. ET), along with the quarterly Grain Stocks report (as of March 1). We also get the API report at 3:30 central and we are expecting increases in supply with crude gas and diesel all up 2 million barrels.

The back end of the curve still suggests that as soon as the war is over prices might plummet. I am hearing from hedgers I have not heard from for a while. I expect I will hear more. That will lead to more oil production ion the US and more Nat gas production as well In the big picture of course fossil fuels are not going away despite what the International Energy administration tried to sell us some years back in fact in a must read in Oil Price it reported that reported that Chevron says the world must expand, not replace, energy supply to meet surging demand driven by population growth, AI, and declining legacy production.

Chevron is reinforcing its core message that the world needs more energy from all sources—and soon. At CERAWeek 2026, CEO Mike Wirth and senior leaders laid out a strategy focused on expanding supply across oil, gas, and new technologies, leveraging artificial intelligence (AI) to boost efficiency and decision-making. Wirth cautioned that natural declines in oil and gas fields could create a supply gap equal to “five Saudi Arabia’s” over the next decade, necessitating massive investment. Rather than moving away from hydrocarbons, Chevron calls for “energy addition”—increasing overall supply to stabilize markets and ensure reliability. The company also highlighted AI’s dual impact: proprietary tools like ApEX and APOLO improve operations and predict well performance, while growing AI workloads are driving up electricity demand and straining power grids. To meet this rising demand, Chevron is promoting natural gas as a scalable, reliable solution for powering energy-hungry data centers, with the flexibility to shift toward lower-carbon alternatives in the future. And boy! Do we have a lot of Nat gas. Nat gas futures are trading lower this morning, with the May 2026 contract (NGK26) hovering right around $2.83–$2.84, down about 1.5–1.8% on the day. We’re seeing some follow-through selling after yesterday’s sharp drop as warmer Fox weather forecasts keep the pressure on near-term demand expectations.

The big picture on supply remains overwhelmingly bearish. The U.S. just wrapped up another record year in 2025 with marketed natural gas production averaging 118.5 Bcf/d — up 5.3 Bcf/d from the prior year. EIA is now calling for even higher records ahead: 120.8 Bcf/d average in 2026 and 122.3 Bcf/d in 2027, led by the Appalachia, Haynesville, and Permian basins (which alone will account for nearly 70% of output). We’re simply flooding the market with supply right now. On the weather front, the latest FOX Weather outlook for April is a classic mixed bag that’s leaning warmer overall. A cold blast is expected to bring snow, ice, and below-normal temps back to the Midwest, Plains, and Northeast early in the month, which could give a short-term pop to heating demand. But the bigger story is the spring temperature warmup finally arriving across much of the East, combined with an active stormy pattern and severe weather risk targeting millions in the Central U.S. As that ridge rebuilds over the eastern half of the country, above-average warmth looks set to dominate the second half of April and into May — exactly when heating demand should be fading fast anyway.

Still the bottom line contuses to be record U.S. production + a warming trend, The latest FOX Weather maps = continued headwinds for nat gas. We’ll need a sustained cold shot or a major storage draw surprise to turn this market around. Trade accordingly and stay nimble — spring is here where hopes spring eternal or something like that.

Still download the Fox weather ap in case things change as they could. Also stay tune to the Fox Business Network. Invested in You! Early Warning I will be traveling Good Friday to the 16th of April so we will only be doing special updates as needed, If you need anything you can contact my team or I at 888-264-5665 or email me at pflynn@pricegroup.com



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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.

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