Oil Surges Above $85 as Hormuz Shipping Disruptions Intensify; Gas Rises Despite Warmer Weather Outlook

WTI breaks above $85 as Hormuz disruption rattles energy markets

• The WTI prompt-month contract climbed $4.86 to $85.87 on Friday morning (7:30 AM CT)
• US crude futures pushed past $85/Bbl for the first time in nearly two years as the escalating Middle East conflict triggers widespread disruption across energy markets, with tanker traffic through the Strait of Hormuz largely stalled
• • According to WSJ, Kuwait is starting to cut production at some oil fields after running out of storage
• Prices advanced even after President Trump indicated “imminent action” aimed at easing pressure on energy prices and the Treasury Department loosened restrictions affecting India’s purchases of Russian crude
• • Washington has allowed India to temporarily step up imports of Russian oil, reversing earlier efforts to curb flows to the world’s third-largest crude buyer as tensions in the Persian Gulf disrupt traditional supply routes
  • Officials have also reportedly considered measures involving activity in oil futures markets as part of broader efforts to calm prices
• With hostilities showing little sign of easing, Goldman Sachs warned that crude could climb above $100/Bbl if supply disruptions persist, though the bank’s base case assumes shipping gradually resumes and prices average around $76/Bbl in Q2
• Iranian Foreign Minister Abbas Aragchi said in an interview with NBC News that Tehran is not seeking negotiations and is prepared for a potential ground conflict, while President Trump later told the same network that such a move is not currently under consideration

Natural gas is up 7.2c to $3.075/MMBtu (As of 07:05 AM CT)

• L48 lost 22.6 Bcf of forecasted demand this morning with warming temperatures across the 6-15 day range of the forecast period
• The L48 population weighted average temperature for the week ending 3/13 is forecasted to be 57.7°F, roughly 6 ° above the 10 year average (Criterion)
• • Gas demand is expected to flip to above average on 3/16 as temperatures decrease the following week (S&P)
• LNG feedgas demand rose slightly to 19.8 Bcf/d this morning
• • Golden Pass only nominated for 3 MMcf/d of feedgas this morning, still expecting to ramp up early this month

US LNG utilization rises as Cameron LNG returned from outage (S&P)

• Cameron LNG experienced an unplanned outage on March 2nd due to a fire at a substation, this brought total US feedgas demand down to 18.1 Bcf/d on March 2nd
• It ramped back up on March 4th, back to 2.1 Bcf/d
• Gains in Sabine Pass and Golden pass are expected to return total US feedgas demand above 20 Bcf/d next week (Criterion)