The Reckoning Unleashed. The Energy Report 06/13/2025

A long-awaited attack on Iran has begun and it is having, and will have, major impacts on energy prices and oil infrastructure. The Wall Street Journal reported that Israel says it has planned out 14 days of operations. Israel struck dozens of targets in Iran, aiming to cripple Tehran’s nuclear program. The wave of attacks also targeted scientists and military leaders. At least three top Iranian generals were killed.

While Israel’s attack on Iran is not a surprise and has been probably decades in the making, it still may be a shock to some in the energy markets who thought that this day might never come. Yet because of the methodical planning and restraint from Israel, the market was probably underestimating the risk of an attack.

The market was lulled into a false sense of security only because this attack had been speculated about for many years but somehow never really happened. In the last few weeks months and years there were many times when the market assumed that we would see this type of attack and even though within the last year Israel has attacked Iran in a limited fashion, even then it didn’t rise to the level of what we are seeing now which could be all out war. In recent days the signs were clear that an attack may be imminent especially with the removal of US personnel from key areas in the region.

Now the oil market is going to be subject to how this attack and war plays out over the coming days. The United  States stated we were not involved in the attack and indicated that they tried to dissuade Israel from proceeding.

According to the Jerusalem Post, an Israeli official stated that Israel shared evidence with the Trump Administration regarding Iran’s progress towards a nuclear bomb, fully coordinating with the Americans.

On Truth Social President Trump said, “I gave Iran chance after chance to make a deal. I told them, in the strongest of words, to “just do it,” but no matter how hard they tried, no matter how close they got, they just couldn’t get it done. I told them it would be much worse than anything they know, anticipated, or were told, that the United States makes the best and most lethal military equipment anywhere in the World, BY FAR, and that Israel has a lot of it, with much more to come – And they know how to use it. Certain Iranian hardliner’s spoke bravely, but they didn’t know what was about to happen. They are all DEAD now, and it will only get worse! There has already been great death and destruction, but there is still time to make this slaughter, with the next already planned attacks being even more brutal, come to an end. Iran must make a deal, before there is nothing left, and save what was once known as the Iranian Empire. No more death, no more destruction, JUST DO IT, BEFORE IT IS TOO LATE. God Bless You All!

The increase in oil prices resulted in a significant surge, or a reverse crash to the upside with WTI exceeding a 10% rise to reach $77.62 in the overnight market. Normally on a course in these war events, you get a big pop and a drop on prices.

President Trump is already showing concern about the spike in the price of oil. There is a possibility of a Strategic Petroleum Reserve release but keep in mind that President Biden drained the reserve and damaged the caverns making the Strategic Petroleum Reserve less effective. Biden misused the reserve but now with this attack by Israel on Iran, it could rise to the level of a real emergency especially if we lose Iran’s oil exports completely. And if the war spreads to other region disrupting oil supplies, we also have to be aware of some of Iran’s proxies lashing out with terror attacks against the US and potentially oil tankers and the like.

Iran was the ninth largest producer of oil providing close to 3 to 4% of daily supply. While Israel did not attack Iran’s oil infrastructure according to reports they did go after the nuclear facilities. The Wall Street Journal reported that, “The Natanz nuclear site is among those targeted by Israel in Iran, said Rafael Grossi, chief of the International Atomic Energy Agency. Grossi said the agency is in touch with Iranian authorities about radiation levels and is in contact with local inspectors. “The IAEA is closely monitoring the deeply concerning situation in Iran,” he said.

The Strait of Hormuz, a vital passage for 18 to 19 million barrels of oil daily, is frequently mentioned in discussions about attacks near Iran. While Iran has threatened to block the Strait before, their current weakened position makes this uncertain. There’s still a risk from Iran’s proxies like Houthi rebels and Hamas, who may retaliate.

There might be the risk of sleeper cells launching attacks in the US or elsewhere. Reuters reported that, “Iran promised a harsh response and Israel said it was working to intercept about 100 drones launched towards Israeli territory in retaliation.”

Consumers should prepare for a possible increase of 5 to 10 cents per gallon at gas pumps due to the recent attack. Whether this rise will continue depends on developments in the next few days. Don’t panic and buy gasoline; we don’t anticipate shortages. Although much Iranian oil went to China, the global market’s impact will be felt in the United States.

Another consideration is the US natural gas market. Previously protected from such attacks due to its domestic focus, it is now vulnerable because the US has become a significant exporter of liquefied natural gas, which can impact domestic prices.

Bloomberg reported that Israel ordered its biggest natural gas field to be temporarily shut down, the country’s energy ministry said. The closure of the offshore Leviathan field follows security concerns after Israel’s attack on Iran and Tehran’s promise to retaliate. The shutdown follows Energean Plc also suspending its gas production on orders from the ministry following the rapid escalation of geopolitical tensions.

The disruptions are likely to affect regional supplies, mostly to Egypt, just as the North African country’s gas demand is rising with the summer heat. A prolonged period of lower Israeli supply may force Cairo to bring forward LNG purchases, further tightening global markets. Gas prices in Europe rose as much as 6.6%.

Typically, in events such as these, we observe a temporary increase followed by a decrease in prices as things stabilize. However, we are currently experiencing significant volatility, which we are monitoring closely. Option premium values have almost doubled due to the increased volatility. These options can be used as protection for specific trades. Please contact me if you have any questions on how to proceed.

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