Crude Rebounds as Escalation Risks Broader Middle East Conflict; Gas Inches Higher as Production Slips

Crude rebounds as Middle East conflict intensifies

• The WTI prompt-month contract rose $3.59 to $91.72/bbl on Tuesday morning (7:30 AM CT)
• Prices dropped sharply on Monday after President Trump postponed a potential strike on Iran’s energy infrastructure by five days, citing possible diplomatic engagement
• • Iranian officials rejected claims of negotiations, while Israeli strikes across the region continued
• The Wall Street Journal reports Saudi Arabia and the UAE are preparing for potential involvement, raising the risk of broader regional escalation
• Ongoing conflict is disrupting flows through the Strait of Hormuz, forcing Gulf producers to shut in several million barrels per day
• • Bloomberg reports that Iran has begun imposing transit charges on select commercial vessels moving through the Strait
• Goldman Sachs analyst Dean Struyven noted that prolonged disruption could extend current tightness beyond the Middle East and Asia into global markets
• • The bank now forecasts WTI to average $79/bbl in 2026, up from a previous estimate of $72

Natural gas prompt month rebounds as gas production slips

• Natural gas is up 3.4c to $2.925/MMBtu (As of 07:30 AM CT)
• Despite relatively weak prompt price, the forward-looking seasonal strips have been gaining over the last month
• • Winter 26/27 is around $4.40/MMBtu, Summer 27 is around $3.50/MMBtu, and Winter 27/28 is around $4.35/MMBtu, all up from a month ago
• L48 production slipped 1 Bcf this morning to 109.1 Bcf/d, combined with Canadian imports being slightly down (Criterion)
• • Output is at a multi-week low
• Weather continues to warm into the shoulder season
• • The Euro Ens weather forecast shifted warmer, with temperatures rising over 8°F
  • L48 average temperatures are at or above the 10 year average for almost the entire forecast period

Qatar Energy CEO says repairs from recent strikes are expected to take 3-5 years (S&P)

• Force Majeure may be declared for up to five years on some long-term LNG contracts
• The US is expected to add roughly 9 Bcf/d of feedgas demand by the end of the decade
• • The US can play a key role in preventing demand destruction in nations relying on LNG deliveries