Crude Rockets Higher as Escalation Risk Builds in US-Iran Standoff

Crude leaps on geopolitical risk as US-Iran nuclear talks continue

• WTI prompt-month climbed $2.39 to $67.60/bbl Friday morning (7:30 AM CT), extending gains as traders priced in heightened supply-risk premiums amid deepening US-Iran tensions
• Crude futures rallied into the weekend as markets brace for a potential escalation
• • Iranian Foreign Minister Abbas Araqchi said technical teams would meet in Vienna starting Monday and that political talks will resume next week
  • However, concerns about a potential US strike on Iran is supporting crude prices, with the US military buildup in the region now the largest since the 2003 Iraq invasion, reinforcing a geopolitical risk premium
• In a further sign of elevated regional stress, the US Department of State authorized the departure of non-emergency staff and their families from Mission Israel due to “safety risks,” reflecting contingency posturing amid the diplomatic impasse
• Prediction markets showed odds of a US strike on Iran by early March jumped Friday morning, underscoring how conflict risk is being speculatively priced into crude
• Front-end WTI call-skew remains firmly in positive territory, underscoring elevated near-term tail risk as traders continue to pay up for upside protection

Natural gas prompt month is up 4.8c to $2.875/MMBtu. (As of 07:30 AM CT)

• L48 balances loosened as population weighted average temperatures warmed to end this week
• • There was slight overall warming in most L48 regions in this mornings forecasts, adding a L48 total 4.1 °F to the 1-15 day range forecast period
• Production remains slightly below last weeks numbers, but should push higher early next week as lingering freeze-offs and Permian pipe work ends (Criterion)
• LNG feedgas demand has returned to around 20 Bcf/d, thanks to this weeks surge in flows to Golden Pass
• • Golden Pass has added 153 MMcf/d of feedgas demand this week for a weekly average of 229 MMcf/d of demand

EOG targets gas-led growth in 2026 (S&P)

• EOG plans to grow overall output next year by 13%, with oil production only accounting by a modest 5%, according to company executives
• • This will be driven by targeted activity in the company’s Dorado and Utica acreage
• Company execs expect US gas demand to grow at a 3-5% CAGR, and are investing in building a gas business position to supply the growing market