Crude Prices Surge as Middle East Conflict Reignites; Gas Stabilizes on Last Day of August Contract

Crude prices surge as Middle East conflict re-escalates

• The WTI prompt-month contract climbed $5.06 to $84.32/Bbl Wednesday morning (7:45 AM CT)
• President Trump warned that Iran would face a forceful response after Tehran launched missiles at US bases in Jordan
• The US and Saudi Arabia also carried out strikes against Iran-backed militia groups in Iraq in retaliation for drone attacks targeting Saudi energy infrastructure
• Per Bloomberg data, observable tanker traffic through the Strait of Hormuz remained limited early Wednesday, while insurers and shipowners grew increasingly cautious about operating in both Hormuz and the Red Sea
• WTI implied volatility increased following the renewed attacks, while options markets maintained an upside bias as call skew remained elevated despite the earlier pullback in crude prices
• The Bal 2026 strip is once again approaching $80/Bbl, while the Cal 2027 strip moved back above $70/Bbl (7:45 AM CT)

Gas finds floor on prompt contract expiry day

• Natural gas is down -0.1c to $2.661/MMBtu (As of 07:30 AM CDT)
• Power burn slipped well below 50 Bcf/d to 47.1 Bcf/d as temperatures bottom out in the forecast period
• Temperatures cooled in the forecast range by 3.6°F, led by losses in the Midwest and Rockies
• • CDD forecasts for the first two weeks of August are also trending a bit lower, now averaging roughly 14 CDDs for the first two weeks (Criterion)
• Feedgas has moved a bit higher this week, currently sitting at 18.54 Bcf/d this morning (Criterion)
• • Last week, feedgas demand averaged roughly 18.2 Bcf/d

A heat dome is forming in the West, but severe thunderstorms are forming in the East (NGI)

• The storms are expected to moderate temperatures across the East, offsetting some of the increased cooling demand generated by the West