Week Ending May 1

Crude Rallies Above $100 as Iran Stalemate and Hormuz Constraints Persist

Crude prices rallied this week as the US and Iran remain at a stalemate, with the WTI prompt-month contract settling at $101.94/Bbl on Friday, up more than $5 week over week. While the ceasefire in the Middle East has largely held, flows through the Strait of Hormuz remain restricted, with both US and Iranian measures continuing to limit transit. With no clear timeline for renewed negotiations, geopolitical uncertainty continues to cloud the near-term price outlook.

Prices moved higher as President Donald Trump met with senior national security and foreign policy officials to evaluate the ongoing impasse. He was also briefed on potential military responses, including a series of “short and powerful” strikes targeting Iranian infrastructure. Alongside military options, the administration has signaled it may extend the blockade on Iran for another one to two months, aiming to force upstream shut-ins and sustain economic pressure.

Mounting pressure on Tehran is bringing storage constraints into focus, increasing the likelihood of forced production curtailments. According to Kpler, Iran has approximately 12 to 22 days of remaining storage capacity. However, while the blockade is tightening physical constraints, its financial impact may be delayed, with estimates suggesting meaningful effects on oil revenues may not materialize for another three to four months. As the US leans further into economic pressure, Iran continues to exert influence by maintaining control over transit through the Strait.

In a separate development, the United Arab Emirates announced plans to withdraw from OPEC, citing the need for greater flexibility to respond to evolving market conditions. While the move is historically significant, its immediate impact on prices has been limited, as any incremental supply response is unlikely to materialize before 2028.

Reflecting the prolonged disruption, Goldman Sachs raised its oil price outlook, pointing to the sustained constraints on flows through Hormuz and the resulting acceleration in inventory draws. The bank now expects WTI to average $83/Bbl in 4Q26, up from a prior estimate of $77/Bbl. Analysts estimate that approximately 14.5 MMBbl/d of disrupted Persian Gulf supply is driving global inventory draws of 11–12 MMBbl/d in April, a pace widely viewed as unsustainable and one that could eventually trigger demand erosion if maintained.

With no clear resolution to the conflict and supply disruptions ongoing, AEGIS maintains a neutral outlook.

June Henry Hub Posts First Weekly Gain in Seven Weeks

The prompt month Henry Hub contract gained 8c this week to settle at $2.77/MMBtu, following seven weeks of lower prices. The rest of the forward curve was less changed, with the Winter ‘26/’27 seasonal strip up 3c to $3.97/MMBtu and Summer ’27 unchanged at $3.24/MMBtu.

After a particularly mild March and April, May is looking to be significantly cooler. This should not result in a substantial amount of gas demand, but it does represent an improvement in the near-term demand outlook compared to prior weeks and has helped lift gas prices. However, May is one of the lowest demand months, so the difference between a particularly cold or mild May is not very big.

This week, the EIA reported a 79 Bcf build in Lower-48 inventories. This was the fourth consecutive release to show an expanding storage surplus, now 153 Bcf above the five-year average. While most of the excess inventories are in the western half of the US, inventories in the eastern half have now reached the five-year average. Our modeling continues to show Lower-48 storage ending the injection season at 3.92 Tcf, which would be about 118 Bcf above the five-year average.

Continued growth in LNG feedgas demand from the ramp up of Golden Pass LNG and the Corpus Christi Stage Three expansion should lend some support to gas prices this summer and into next winter, especially if gas production growth remains slow. If Haynesville production were to begin accelerating quicker than anticipated, or weather-driven demand comes in weaker than average, downside risks could emerge to summer prices.