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The Energy Report

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


A New Proposal. The Energy Report 04/27/2026

It’s Monday morning and Axios is reporting that Iran gave the US a new proposal for reaching a deal on reopening of the Strait of Hormuz and lifting the naval blockade first and postponing nuclear negotiations for a later stage. Good luck with that. Oil that popped up over $2.00 a barrel overnight on the opening is pulling back a bit on this latest talk that Iran is looking for a way out because the naval blockade is bringing Iran’s economy to knees.

And it is no wonder Iran wants to talk as over 90% of its seaborne trade—about $435 million daily—has been severed, leaving oil exports stranded and prompting the IMF to forecast a 6.1% GDP contraction for 2026, though some analysts estimate the decline could reach 10%. Food inflation has soared to 105%, with staples like bread, cereals, red meat, poultry, and cooking oil experiencing triple-digit price hikes. The collapsing rial and the loss of over 700,000 jobs from bombed infrastructure and factory shutdowns have hit ordinary Iranians hard. In cities like Tehran, markets remain open but see far fewer shoppers, as people buy only essentials amid price spikes of 40% or more since hostilities escalated. War damage is evident in neighborhoods, unemployment is rising, and families are cutting back on all non-essentials.

The regime has ramped up street-level mobilization and repression to keep a lid on discontent, but the economic pain — compounded by earlier protests over the same issues in late 2025/early 2026 — is creating widespread frustration and quiet anxiety as the Iranian regime .contuse to repress their people

Tehran is signaling it needs the blockade lifted now to stop the economic bleeding, even if that means kicking the nuclear can down the road. Markets will be watching closely how Washington responds as the regimes could crumble yet they are still on the street terrorizing their population should they dare to descent.

Though Germany’s Chancellor Friedrich Merz seems to be rooting for Iran after saying that “ Iranians are obviously negotiating very skillfully. The Chancellor continued “They know exactly how to play the game — leveraging every day the Strait stays contested, building maximum pressure while the world pays the price in energy markets. One has to admire the tactical acumen, even if the strategic implications for Europe are… challenging.”

Merz stressed Germany’s preference for diplomacy over escalation, noting partial mining in Hormuz complicates quick reopenings, and called for a “lasting political solution” that avoids further disruption to global shipping and energy flows.

No major attacks from Iran this weekend, but the wider conflict still looms, with Iran’s past missile and drone strikes and ongoing shipping disruptions hanging over everything. Still gasoline Gas futures and crack spreads are rinsing so gasoline may be the place to be.

According to AAA, gas prices have started to tick up a bit after some recent softness, while diesel has actually edged lower. The Gas crack spread is surging as US demand and export is strong and recent EIA reports showed gasoline stocks drawing down (sometimes more than expected), adding upward pressure even as crude fluctuates as the spring driving season and maintenance tighten supplies.

Right now, the average price for regular gas sits at $4.111 per gallon. That’s up from yesterday’s $4.099, last week’s $4.042, and a full month ago when it was $3.978. Compared to this time last year, we’re paying a hefty 96 cents more per gallon.

Diesel, on the other hand, has moved in the opposite direction — it’s currently at $5.449, down from yesterday’s $5.464 and noticeably softer than last week’s $5.531.

Overall, pump prices are climbing again on the gasoline side after a relatively alma stretch, but diesel drivers are catching a little relief for now. Keep an eye on it — spring driving season and refinery issues can keep things moving pretty quickly.

Natural gas futures are d attempting a classic dead cat bounce off multi-month lows around the $2.52–$2.54 area (a 17-month low), with the May contract climbing roughly 1–2% intraday on April 27 to trade near $2.55–$2.73. This technical rebound comes after a brutal slide from January’s spike highs near $7.40+, driven by oversold conditions, short covering, and a bounce off key Fibonacci support levels. But as the name implies, dead-cat bounces are often short-lived without fundamental follow-through — and the bigger picture remains supply-heavy in this shoulder season.

Bearish fundamentals still dominate with U.S. storage is running ~7% above the five-year average, with a massive 103 Bcf EIA injection last week confirming the surplus. Production remains robust (EIA sees record highs ahead in 2026), and shoulder-season demand has collapsed as mild spring weather curbs both heating and early cooling needs. Its technically oversold setup with RSI hovering near oversold territory (~34), prices testing the Fib 0 extension floor, and a potential RSI divergence setting up the short-term bounce we’re seeing now. Macro crosscurrents: LNG exports are strong, but domestic balances are loose. Any geopolitical noise (e.g., Middle East tensions) can spill over and lift energy sentiment broadly, but the real driver here is domestic weather and storage. The Fox Weather outlook is turning more constructive for nat gas bulls in the near term. After a stretch of record-warmth across the West and Central U.S. that crushed demand, forecasters are now eyeing a pattern shift: cooler shots moving into the Midwest, Ohio Valley, and Northeast this weekend and into early next week. Highs trending closer to seasonal norms (or even below in spots) could lift heating-related demand by a couple Bcf/d and give prices some breathing room.

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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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