Crude Reprices Higher as US-Iran Renew Strikes; Gas Dips as L48 Weather Shifts Cooler

Crude reprices higher as US and Iran renew military strikes

• The WTI prompt-month contract rose $2.85 to $86.25/Bbl Monday morning (7:30 AM CT)
• WTI climbed above $86/Bbl after US forces struck an island in the Strait of Hormuz and Iran retaliated with attacks on the UAE and Jordan
• An estimated 6–8 MMBbl/d of crude is now moving through the Strait of Hormuz, according to Bloomberg
• The recovery in tanker traffic has tempered supply concerns even as the direction of the conflict remains uncertain
• • “The key is to watch the barrels, and as long as they continue to flow though the Strait of Hormuz, the buying appetite in the market remains muted for fear of being caught out,” said Ole Hansen of Saxo Bank
• Goldman Sachs warned that the US-Iran and Russia-Ukraine wars are intensifying pressure on the global refining system
• • Refinery outages are running 60% above seasonal norms, while product inventories continue to decline despite some demand destruction, the bank said
  • Goldman expects the US margin for producing diesel from Brent crude to average $63/Bbl
• Meanwhile, Morgan Stanley trimmed its Q3 2026 WTI forecast to $85/Bbl from $86/Bbl but raised its Q4 forecast to $96/Bbl from $76/Bbl

Gas drops as L48 forecast shifts cooler over weekend

• Natural gas is down -1.3c to $2.875/MMBtu (As of 07:22 AM CDT)
• The L48 lost nearly 8°F over the forecast period, with losses centered along the East Coast and in the Rockies
• Average storage week temps stay in the 78°F range for the week ending 9/4, before falling by 2°F the following two weeks to 76.5 and 74.4 respectively (Criterion)
• LNG feedgas demand is at a fresh two week high, at over 19.3 Bcf/d this morning
• Mexican exports had a strong August, averaging 8.2 Bcf/d which is up 0.4 Bcf/d over July

A couple of storm paths have shifted over the weekend

• The remnants of Dolly pose less of a threat to Florida now, tracking South
• A new storm is forming in the Gulf, with a Path through Houston towards Central Texas
• • Right now, most models keep it as a tropical storm or depression, posing little threat to natural gas demand

Data Center buildout becomes bipartisan political flashpoint (NGI)

• One of the key drivers of gas demand growth over the next decade is data centers, and 15 states have introduced legislation to restrict their buildout
• It’s worth noting that LNG, the primary demand growth driver, is not experiencing this roadblock