Crude Surges as US-Iran Tensions Reignite; Texas and Gulf Gas Basis Pricing Shift

Crude surges as Trump says US-Iran deal is over

• The WTI prompt-month contract climbed $3.06 to $73.50/Bbl on Wednesday morning (7:30 AM CT)
• Crude futures rallied after President Trump declared the tentative ceasefire with Iran was over, adding that the US would "probably" launch additional strikes against Iran later tonight
• Bloomberg reported that US forces carried out strikes on more than 80 targets after Iran launched attacks on multiple merchant vessels the previous day.
• • Iran reportedly targeted a Qatari LNG carrier and two large crude oil tankers
• With both Washington and Tehran accusing each other of violating the memorandum of understanding, the Cal 2026 strip moved above $72.50/Bbl, while the Cal 2027 strip gained more than $1.00/Bbl

Gas moves higher as power demand picks back up

• Natural gas is up 4.3c to $3.308/MMBtu (As of 07:30 AM CDT)
• Power demand gained over 1.1 Bcf this morning as temperatures picked back up near the 10-year average
• • Temperatures went from around 5°F above the 10-year average on July 3 to just below the 10-year average yesterday (Criterion)

Permian gas production hits record high

• Gas production in Permian has averaged around 24.8 Bcf/d, with output climbing to nearly 25 Bcf/d over last weekend (S&P)
• The record highs can be attributed to the new takeaway capacity unlocked by the startup of Kinder Morgan’s GCX expansion

Texas and Gulf Basis strips see pricing shifts

• CGM Mainline basis has fallen to multi-year lows over the last few months, down to -$0.43/MMbtu
• Transco Z4 Basis has tapered off recent highs, falling from $1.40 to $0.81 from the beginning of July