Week Ending March 13

Hormuz disruption keeps crude elevated as governments deploy emergency supply measures

Crude markets remained dominated by the escalating disruption to shipping through the Strait of Hormuz as the conflict involving the United States, Israel, and Iran continues to threaten one of the most critical arteries in global energy trade. The WTI prompt-month contract ultimately settled at $98.71/Bbl on Friday as traders continue to assess the scale and duration of supply losses tied to the closure of the strait.

Reports indicate that roughly 6.7 MMbbl/d of crude production has already been removed from the global market as exporters struggle to move barrels through the closed waterway. Saudi Arabia has increased flows through pipelines to the Red Sea while other Gulf states are exploring limited bypass routes. However, these alternatives provide only partial relief because the majority of exports still rely on tanker transit through Hormuz. As a result, the regional supply chain has become increasingly strained even as governments attempt to stabilize shipping conditions.

Governments and international agencies responded by attempting to offset the disruption through strategic reserve releases. The International Energy Agency estimates the conflict could reduce global oil supply by roughly 8 MMbbl/d this month with flows through the waterway already down more than 90 percent. In response the IEA agreed to coordinate a release of 400 MMbbl from emergency oil reserves which would mark the largest drawdown in the agency’s history. Policy responses from Washington also evolved as the administration attempted to contain the economic fallout from higher energy prices. Officials approved a temporary waiver allowing additional purchases of Russian crude while simultaneously preparing a 172 MMbbl drawdown from the United States Strategic Petroleum Reserve (as part of the wider IEA release). The government is also exploring additional measures including potential intervention in futures markets and a temporary waiver of shipping restrictions under the Jones Act.

For now, the outlook for crude markets continues to hinge on the duration of the shipping disruption. Strategic reserve releases and other policy measures can provide temporary supply relief, but they cannot fully replace the massive volume of oil that normally transits through the Strait of Hormuz each day. If tanker traffic resumes prices could retreat as global inventories remain historically elevated. However, if the disruption persists long enough for storage constraints to force widespread production shut ins across the Gulf prices will likely remain elevated and possibly surge higher.

Natural gas falls 5c as shoulder season approaches

The April Henry Hub contract lost 5c this week to settle at $3.14/MMBtu, reversing some gains from last week. The Summer ’26 seasonal strip fell 9c to $3.41/MMBtu and Winter ‘26/’27 lost 7c to finish at $4.43/MMBtu. The EIA reported a smaller than expected withdrawal, and while the near-term demand forecast improved slightly over the course of the week, weather is still anticipated to come in bearish for March.

The EIA reported a withdrawal of -38 Bcf from storage, which shrunk the deficit to -17Bcf below the five-year average. This withdrawal was bearish compared to expectations and the five-year average withdrawal for the corresponding week. Analysts expected a -48 Bcf withdrawal, according to the Bloomberg survey. The five-year average withdrawal for the corresponding week was -64 Bcf. Storage injections will begin soon, with the EIA likely reporting a small build next week, although the week after will show another withdrawal. Our estimates put Lower-48 inventories at 1.78 Tcf before consistent injections begin. This is only a few Bcf below the five-year average.

While demand in March is usually lighter than peak winter months, this March has been the third warmest of the past 25 years, suppressing gas demand further. This is despite the first half of next week being cooler than the ten-year average, with the rest of March having been well-above average, and another warm period forecasted following the cold front.

Underlying fundamentals have not changed too much in recent weeks, with production still around 108.5 Bcf/d and LNG feedgas demand strong around 20 Bcf/d and expected to grow further. Total Lower-48 supply has trended lower, driven by lower Canadian imports, although the import weakness has largely been due to weak downstream demand in the Western half of the country, keeping the supply-demand balance relatively balanced outside of weather. With feedgas demand continuing to rise this year as Golden Pass LNG and Corpus Christi Stage Three start up, production will need to rise over the course of 2026. More Permian supply will be unlocked ahead of winter as the Blackcomb pipeline starts up, but the additional supply needed will need to come from gas-focused areas like the Haynesville.