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The Energy Report

Phil Flynn
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pflynn@pricegroup.com


Is Iran getting ready to cry uncle? The Energy Report 09/22/2026

There is a growing sense that what is left of Iran’s leadership is looking for an off-ramp. The threats are getting weaker as the economy collapses. Oil prices plunged—and even the diesel crack pulled back—after a report that Tehran offered to reopen the Strait of Hormuz within seven days if the United States eases its military blockade and related operations around the waterway.⁠ While some Iranian sources deny it and according to Reuters are invalid and untrue showing the problem with Iran is not knowing what head of the snake to believe. The market is starting to believe the head that is crying Uncle. Oil prices did fall bout 3% after the reports came out that Iran floated a possible reopening of the Strait of Hormuz within a week if Washington eases pressure, a development that immediately lifted hopes for safer tanker traffic through the world’s most critical energy chokepoint.

The Kremlin also said President Putin spoke with Saudi Crown Prince Mohammed bin Salman about Yemen and the broader Middle East and joined in a call for safe passage through Hormuz, adding a high-level diplomatic note to the morning tape. Gulf states are also expected to meet President Trump in New York later Tuesday and are likely to urge him to avoid any further escalation with Iran.

In a Fox News interview, Secretary of State Marco Rubio said the ideal outcome would be Russia and Ukraine refraining from targeting energy sites and that an energy-infrastructure ceasefire would be a great idea; he also expressed concern about U.S.-linked ships being targeted and attributed the bulk of recent oil-price increases to developments in Yemen and Ukraine. Markets will now watch whether those diplomatic signals translate into actual de-escalation and a more durable reopening of Hormuz.

Based on recent data, why would Washington give Iran what it is demanding? Substantial oil is already moving. U.S. Central Command Commander Adm. Brad Cooper said U.S. forces have helped more than one billion barrels of crude leave the Gulf over the past two months, with more than 2,000 commercial ships transiting, while Iran has exported none under the blockade. A senior White House official put current oil flows through the corridor at 10 to 11 million barrels a day. That is not pre-war 20 million barrels a day, but it is a long way from “Iran holds the global economy hostage.”

Saudi Arabia is acting, not waiting. After Houthi hits on the East-West pipeline forced a shutdown of Yanbu loadings, Aramco loaded about 14 million barrels of crude onto seven VLCCs inside the Gulf. Satellite and tracker data showed Saudi oil moving through Hormuz averaging about 2.9 million barrels a day over the last six days, up from roughly 700,000 barrels a day in August. That is substitution and grit, not surrender.

Secretary of State Marco Rubio has been blunt: Iran’s economy is getting decimated, and the administration will keep strangling the regime’s remaining financial lifelines. He has said President Trump is open to meeting anyone—while pointing out that the only metric that matters is whether ships are moving. Rubio has also floated the idea that an energy-infrastructure ceasefire would be a great idea on Fox News and that is the real story. The majority of the product problem is not just crude in the water. It is the lack of refining capacity.

That points straight at Ukraine’s campaign against Russian refineries. Overnight, Ukrainian drones hit another plant in Russia’s Samara region (the Kuibyshev/Rosneft complex), after recent strikes on the Gazprom Neft Moscow refinery, Syzran, and Yaroslavl. Kyiv’s General Staff now claims more than 45 percent of Russia’s design refining capacity is offline. Russia’s crude runs have already been crushed toward two-decade lows. Diesel and gasoline shortages inside Russia are no longer a rumor.

And yes—this is where Europe’s green-energy experiment meets reality. While Ukraine was taking Russian distillation units offline, too many in the EU decided it was a good idea to shutter refining capacity at home, choke domestic production, and stay hooked on Russian barrels and products. When the middle of the barrel is tight, diesel cracks go parabolic. That is why a drop in crude on a Hormuz rumor can still leave the diesel market looking anything but “fixed.” Iran can offer a seven-day reopening. The United States already has oil moving, a blockade that is starving Tehran of cash, and a president who will talk—on his terms. Crying uncle is not the same as getting paid for it.

This come as the Wall Street Journal’s Alexander Ward & Summer Said) report that the Trump administration is proposing a $5 billion U.S. stake in a new fund to rebuild Gulf energy infrastructure damaged in the seven-month Iran war and cut reliance on the Strait of Hormuz.

The plan, called the Partnership for Allied Trust and Construction (Pact), would seek matching money from eight partners—Saudi Arabia, UAE, Qatar, Bahrain, Kuwait, Oman, Iraq, and Jordan—for a $10 billion pool. It would be run by the U.S. Development Finance Corporation. Talks are underway; terms could change and buy-in is not locked in.

Officials frame it as an admission that the war wrecked pipelines and refineries and will keep squeezing global oil and gas even if Hormuz reopens. Some Gulf officials call it premature without a deal with Tehran and note Iran could hit new sites. Dependencies on the strait also differ across the region. Having this plan is going to be another blow to Iran’s crazy dreams to control the Strait of Hormuz another fantasy in Iran that’s going to disappear and that crazy thing called reality. President Trump is scheduled to deliver remarks to the United Nations General Assembly at 9:55 a.m. Eastern (8:55 a.m. Central) this morning. President Trump’s historic speech and the possibility of a Chinese trade deal suggest that the tops might be in for the diesel crack spread, though the gasoline crack spread could still rally as it has to regain the ground it lost to diesel. The charts are looking like we’ve seen it top, as I mentioned yesterday in my article called “The Sunday Night Reversal.” It seems to be opening up shorts with more follow-through.

It definitely seems like the pendulum is swinging against Iran, as well as pressure building on the Houthis and the rebels, and the realization that nobody is going to win the Russia-Ukraine war. So it’s in both of their interests to come to some type of ceasefire. And as long as that optimism continues to build, the possibility that we’ve seen the highs for oil is there. If the geopolitics fall apart, then we will have to reassess.

For natural gas can we get out of our slumber? My buddy Ben Smith at Firstenercast is saying that speculative natural gas short sellers are awfully cocky going into winter. Maybe natural gas shorts think that we won’t get winter which would be a very nice thing or maybe they’re just saying that they believe that record production and record exports of LNG aren’t going to be enough to withdraw supply of course Ben and I both know how that can change pretty dramatically if Mother Nature gives us a knock down drag out polar vortex probably not a good time to be short winter calls.

And Ben and I both know this is going to come down to the weather.

If you look at the natural gas flows and the storage picture, there’s still a lot of gas out there. Inventories are sitting around 3,300 Bcf — still a little above the five-year average nationally — and production is holding near record levels. That’s why the market has been so complacent. Traders look at the headline number and figure winter is covered.

But look closer at the East. Despite that complacency, FOX Weather — and you’ve got to have the FOX Weather app on — is flagging a developing nor’easter for the Northeast. FOX Weather meteorologist Bayne Froney and the team were on it yesterday: an early-season coastal storm setting up off the Mid-Atlantic, tracking toward New York and Boston later this week. Gusty winds, heavy rain, high surf, coastal flooding. They’re calling the pattern unusual for late September, but the setup has that same stacked look you saw in the film The Perfect Storm — cold air, moisture, and a deepening low off the coast all lining up.

That’s the risk the gas market is shrugging off. National storage looks fine. Regional demand in the Northeast does not always care about the national number. One well-placed nor’easter, then a colder follow-on pattern, and that “plenty of gas” story gets a lot tighter, fast. Weather first. Everything else second. That’s why it’s important to download the fox weather app so you get this important information but you also need to stay tuned to the Fox Business Network because they’re the only network in America that is truly invested in you now if you haven’t signed up for the Phil Flynn daily trade levels it could be a valuable resource for you also you can get signed up for my special reports and you can open an account with my team today just by calling us at 888-264-5665 you can also e-mail us at pflynn@pricegroup.com.



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