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The Energy Report

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


Hitting the Iran Piggy Bank. The Energy Report 09/09/2026

When we read about the U.S. attack on oil tankers at Kharg Island and the fact that Brent oil went above $100 for the first time since July, we have to remember that this act was another blow to the Iranian oil piggy bank that has kept in power this regime that was the biggest state sponsor of terror. Now this hit should make Iran realize that they can’t win this war and that their attempts to close the Strait of Hormuz or attack their neighbors will do nothing for their good or the good of their people.

They’re not bombing the island. They’re sinking the tankers that load there. That’s how you choke Iran without sending crude to $150 overnight. And folks, that’s the point. Washington is trying to bankrupt the IRGC’s navy without lighting the global crude market on fire. They also want to keep carga island viable so that if Iran’s regime comes to its senses or if there’s a regime change that they’ll be able to rebuild by rejoining the global oil market. Make no mistake about it, Kharg is Iran’s oil cash register. About 90% of their crude used to leave that rock. Trump calls it the “crown jewel” and the “little oil island.” Trump realizes the strategic importance of this for the Iranian economy. He’s been magnanimous so far to the Iranian people buying nod blowing up the pipelines for the rail lines in Iran to give them hope for a future after the machine falls. Back in March we hit military targets on Kharg and left the pipes standing. Yesterday was different. Explosions in the anchorage. A tanker hit. CENTCOM says five Iranian crude carriers were destroyed after the IRGC opened up on a U.S. warship. First, Crews off. One of those ships went down in the Gulf of Oman. That’s not a warning shot. That’s emptying the piggy bank. Iran exports aren’t “down.” They’re trapped.

August loadings were only about 220 to 260 thousand barrels a day. That’s an 80 percent collapse from a year ago. And loadings are not exports. Exports are barrels that actually clear Hormuz and get paid. Trackers say no Iranian crude tanker has made that run since mid-July. China is still burning leftover floating storage. That pile is shrinking. When it’s gone, Tehran’s dollar machine stops.

Look at the Iranian home front. The IMF has Iran’s GDP down 5.4 percent this year — the worst since the war years of the 1980s. Official inflation is in the high 80s. Food is worse. The rial is at record lows, about two million to the dollar on the street. No oil dollars, you print rials. That’s how a petrostate breaks. Smash the cash register long enough and even a regime that lives on fear starts to feel the empty drawer.

We’re in the seventh month of this war and the “calm” is over. The IRGC’s answer was missiles at Azraq in Jordan and a claim they hit ten ships. No one believes them. They also say they captured a U.S. underwater drone at the mouth of Hormuz. That’s the next layer — mines, UUVs, dark hulls. Iran claims it was the latest in the US technology the US said no it was a malfunctioning ship that as many years old.

And now Iran has to deal with the fact that the US treasury just dropped 36 more Iran sanctions, aviation and companies. I think that is more than Canada put on us! Good thing I quit drininking Molson.

Watch diesel harder than crude. That’s where the real squeeze lives. Ukraine’s drones have hit most of Russia’s big European refineries — eight of the top ten at one point. They’re going after crackers and treaters, not just crude units. That’s gasoline, jet, and diesel. Putin has already admitted a “certain deficit” of fuel. Russia is rationing with the Russian harvest priority For Putin Year five of the war and the home front is feeling it. When you break the refinery, crude still comes out of the ground. You just can’t turn it into the product the world actually drives on.

Yet Putin realizes he has to come to the table to stop the attacks on the refineries they had to extend their producer diesel export ban through September 30th 30. The gasoline ban for non-producers runs into 2027. Jet into November. Russia used to be the world’s number-two diesel exporter after the United States. That barrel is staying home to keep tractors and tanks moving. Mediterranean diesel shipments have collapsed. Buyers went shopping in the U.S. Gulf and India. That’s the global squeeze.

and if it wasn’t for drill baby drill in the US energy renaissance the world would be in a much darker place. The EIA says U.S. distillate exports just hit a record — about 1.9 million barrels a day. Weeks over 1.5 million. Running about 30 percent above last year. Destinations: South America, the Med, Europe. The world is short middle distillate because Hormuz is a war zone and Russian plants are on fire.

The trade-off is that U.S. distillate stocks are at the lowest seasonal level since the mid-1990s. Crack spreads have been historic. That’s why pump diesel stays loud even when crude wobbles.

And India? MRPL just said Indian plants have been running 105 to 108 percent of nameplate for six months. IOC has printed quarters over 109 percent. 109% that’s how I how hard I feel I put into this report every day😊 109% how is that even possible! Well it Comes down to the so called Nameplate is a conservative sticker — the original design rate. Complex plants can run hotter: better catalysts, fewer unplanned outages, debottlenecked units, crude slates they were upgraded to handle. Think of it like a car rated 70 that will do 75 all day if the engine and tires can take it. You’re not inventing barrels. You’re using spare engineering margin. They’re prioritizing diesel over jet because that’s where the money and the shortage are. India is now a swing supplier of products while the Gulf and Russia are broken and THE Us is swinging for the export fences . Iran can’t export crude. Russia can’t export diesel. The U.S. and India are running flat-out to fill the gap.

Natural gas is easing off a bit as dreams of $3-plus gas are in the rearview mirror at this point. The key for nat gas will be the weather going forward, and as we know, we’re getting closer to fall. This week we’re looking for an injection into storage of about 22 Bcf. If you look at the storage situation against the five-year average as we get toward the end of the injection season, it still looks fairly adequate — last week’s official print left us at 3,214 Bcf, about 160 Bcf above the five-year average even if we’re a little light versus last year.

Of course you have to have the Fox Weather app, because weather can change the dynamics very quickly. Fox Weather is saying that late-summer heat is hanging on a little longer than the calendar would like, which keeps the air conditioners humming and the injection numbers smaller than the old textbook September build. Then the models start to flirt with a cooldown later in the month — which is when the bulls start looking for a second act and the bears start reminding everybody that we’ve still got a decent cushion heading into winter.

So no, $3 gas didn’t stick the landing this week. But don’t throw the barbecue grill in the garage just yet. One hot week and one skinny injection and this market can still get chatty. Stay tuned, keep the Fox Weather app open, and remember: in natural gas, the weatherman is still the most important trader in the room.

But just to be safe download your fox weather app to keep up with the latest and greatest on the weather and you should also stay tuned to the Fox Business Network because there are the only network that’s invested in you make sure you’re signed up for all my special reports and if you’re ready to trade open your account by calling 888-264-5665 don’t forget to follow me on X at @EnergyPhilFlynn



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