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The Energy Report

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


Stupidity Gets in The Way. The Energy Report 06/08/2026

We all know that many times in our lives, stupidity gets in the way. Sometimes it is our own stupidity, but we all know it’s usually the other person’s stupidity. Well, Iran got stupid overnight, launching missiles at Israel, breaking the ceasefire and causing oil to spike overnight, yet prices are easing. President Trump assures us that both sides, Israel and Iran, are looking to do an immediate ceasefire and that final negotiations on “peace” are proceeding, subject to ignorance or stupidity getting in its way.

Iran’s armed forces announce end of military operations against Israel, warn of harsher attacks if Israel resumes attacks on Lebanon according to Fars news maybe because all of the missiles they shot into Isreal were shot down- Fars News In the meantime, President Trump made it crystal clear: the blockade stays in place, “and in full force and effect, until a ‘final deal’ is reached.” He emphasized that “Both sides, Israel and Iran, are looking to do an immediate ceasefire.” Trump urged calm, stressing the U.S. is “VERY CLOSE to a final agreement with Iran” and doesn’t want these exchanges to derail the bigger picture.

He warned that if a deal collapses on its merits, options like a commando raid could be on the table, yet Iran’s strikes haven’t shifted his focus on finalizing those US-Iran talks. Trump directly told Israel to hold off on a major counterattack, stating firmly: “I call the shots. He doesn’t.” In a Financial Times interview, he added that Netanyahu will have “no choice” but to accept a deal with Iran.

As Axios reported, even as missiles flew, Trump is pushing for both sides to stop shooting and focus on ceasefire discussions. He’s racing to keep the momentum going on negotiations.

Adding another layer, the Iran-backed Houthis in Yemen announced a ban on Israeli ships in the Red Sea, threatening an alternative route near the Strait of Hormuz. Yet America is leading, talks are advancing, and cooler heads are prevailing to protect the bigger win for peace and energy security. These flare-ups look contained—most missiles intercepted with minimal impact—and the focus remains on sealing a deal that strengthens U.S. position and keeps global oil flows reliable. We’ll keep watching the Strait, inventories, and any Trump updates that could spark the next big move in crude. Stocks are also recovering after a strong jibs report raised inflation fears, The Fed doesn’t like us working I guess. The fears were that the Fed would raise rates causing the dollar to surge.

Yet President Trump pushed back firmly against any Federal Reserve rate hikes, stating clearly that raising interest rates now would be wrong. He made the comments during a testy NBC’s Meet the Press interview, directly countering speculation sparked by the strong May jobs report. Trump emphasized that higher rates would harm the economy at a time when growth is solid and inflation pressures are easing—priorities that align with keeping America’s energy dominance and broader economic momentum intact. The interview ended with Trump abruptly walking out—a decisive move that underscored his unwillingness to entertain misguided policy ideas or media gotcha moments that when we look back this interview will look like the Lesley Stahl interview making people of reason wonder if we lost all sense of decency and fairness and a quest for truth.

Yet despite the recent surge in oil prices, crude remains well below its wartime highs, and gasoline prices have been easing up until this point. Warnings of immediate oil and product shortages have not fully materialized as the market has found ways to adjust—through strategic reserve releases, rerouting, demand moderation, and other supply responses. But are we on borrowed time? Many analysts, pundits, and oil company executives certainly think so. They argue the market is wrong and underestimating the underlying risks.

For example, Exxon Mobil Senior Vice President Neil Chapman warned that oil inventories are approaching “really, really low levels” and “unheard of inventory levels” in the coming weeks due to the Middle East conflict. He noted prices could shoot up once those critically low levels are hit, potentially in just two to three weeks.

Chevron CEO Mike Wirth highlighted that “the buffers and the shock absorbers are being steadily drawn down,” with the market’s ability to absorb imbalances “drastically diminished.” He expects pressures to flow more directly into physical prices in June and July.

Saudi Aramco and analysts like those at JPMorgan and Capital Economics have flagged global gasoline and jet fuel inventories nearing “critically low levels” ahead of peak summer demand, with OECD commercial inventories potentially hitting operational stress by early June. UBS noted buffers are largely exhausted. TotalEnergies CEO Patrick Pouyanne and others have pointed out that even if tensions ease, the full lag effects from disrupted production and exports (potentially 5-13 million bpd draws) mean low inventories could persist for months, risking shortages and a slower recovery. Some compare the potential systemic impact to the 1970s oil shocks.

The market has been resilient so far, pricing in a degree of optimism around de-escalation and alternative flows. However, executives and analysts caution that depleting stockpiles leave little margin for error. A prolonged disruption or renewed Strait of Hormuz issues could trigger non-linear price spikes, panic buying, and broader economic pain. They warn that the energy complex has dodged the worst for now, but the warning lights are flashing. Yet the counterargument is that the market may not be as wrong as the bears claim—and the system is proving more resilient than feared. While executives highlight depleted buffers, many analysts and market participants point to several mitigating factors that have kept shortages at bay and prevented a full-blown crisis so far: Strategic reserves and alternative supply responses: The U.S. and other nations have tapped Strategic Petroleum Reserves (SPR) and other stockpiles effectively, while non-OPEC+ producers ramped up output and rerouted tankers around the Strait disruptions. This “shock absorption” has delayed the pain, with U.S. commercial crude inventories still hovering near or above seasonal norms in key areas despite draws.

Demand moderation and destruction: Higher prices have already curbed consumption—particularly in petrochemicals, aviation, and discretionary driving—leading to softer-than-expected global demand growth (or outright contraction in some forecasts for 2026). The IEA and EIA note this self-correcting mechanism is helping balances hold better than pure supply-loss models predicted.

Geopolitical optimism and partial recoveries: Hopes for de-escalation, intermittent peace talks, and partial reopening/re-routing of flows have repeatedly capped upside. Oil prices have pulled back from peaks on any positive headline, showing the market is pricing in a quicker resolution or manageable disruption rather than a 1970s-style prolonged shock. Recent price action reflects this: surges on bad news, but quick fades on diplomacy signals. Refinery and product flexibility: No widespread product shortages have emerged because refiners have adjusted runs, shifted crude slates, and maximized utilization where possible. Gasoline inventories, while under pressure, have built in spots amid seasonal patterns and demand response, keeping pump prices from exploding higher.

Longer-term oversupply risks post-resolution: Some longer-dated forecasts suggest that once the Hormuz situation stabilizes (even partially), a flood of resumed Middle East production plus global spare capacity could flip the market back into surplus later in 2026 or 2027, pressuring prices lower. Executives warning of immediate doom may have incentives to talk up the tightness. The bulls (or at least the pragmatists) argue we’re not on borrowed time so much as in a manageable adjustment period. The market has absorbed the initial hit through ingenuity, demand response, and buffers—proving more elastic than the most dire warnings suggested. That said, the margin for error is thin, and a renewed escalation could still overwhelm these offsets quickly. The truth likely lies in the middle: resilience so far doesn’t eliminate risks, but panic over “unheard of lows” may overstate the immediacy of collapse. Traders should watch upcoming EIA/API data, diplomatic developments, and summer driving season closely. Volatility cuts both ways.

Nat gas little pre-summer rally faded and gapped lower as Fox Weather shows a little heat moderation and on profit-taking, ample supplies, and a slight moderation in the heat outlook from Fox Weather. The prompt month settled around the $3.10-$3.17 area after trading in a choppy range, with the little heat build-up that had supported cooling demand expectations pulling back modestly in the latest models.

The latest EIA Weekly Natural Gas Storage Report (for week ending May 29, released June 4) showed a build of 95 Bcf, bringing working gas in storage to 2,578 Bcf. That’s 3 Bcf below last year at this time but 138 Bcf (about 5.7%) above the five-year average of 2,440 Bcf.

The injection was a touch below expectations and the prior week’s 92 Bcf build, but overall inventories remain healthy heading into the heart of summer. This keeps the fundamental picture well-supplied for now, though stronger power burn and LNG exports could tighten things if heat returns in force. Next report drops this Thursday. Fox Weather has been highlighting building heat across parts of the Central and Eastern U.S., but the latest updates show some moderation in the near term with cooler air filtering in spots (e.g., Northeast relief after recent hot stretches). This has tempered immediate cooling demand expectations, contributing to the price fade.Longer-range outlooks still point to potential above-average temps in June that could boost power-sector nat gas burn, especially if the pattern shifts hotter again. Production remains robust (L48 dry gas near 110+ Bcf/d), and LNG feedgas has been solid but with some maintenance-related dips.

Overall, the market is balancing healthy storage builds against seasonal summer demand risks and global LNG dynamics. Watch this week’s weather models closely for any re-heating of the forecast—that could spark the next leg higher. In the meantime, support may hold around recent lows with resistance near the recent highs.

Stay tuned for more updates as we head deeper into summer driving season and cooling demand. Call me at 888-264-5665 for trade levels or more details! Download the Fox Weather ap and Stay tuned to the Fox Business Network ! 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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Contact Phil at 1-888-264-5665 or pflynn@pricegroup.com.