Project Freedom. The Energy Report 05/04/2026

The announcement lowered crude on the opening but Iran’s boast that any foreign armed forces (especially the US) approaching or entering the Strait of Hormuz will be attacked. Iran stated that safe passage through the Strait of Hormuz must be coordinated only with its forces, asserting full control over the area. This announcement led to a rapid increase in prices.  Now reports that two missiles hit a US warship near Jask Island after it ignored Iran’s warnings according to Iran’s Fars News Agency with will potentially unleash the full response of the US military.  Yet the US is denying the story so once again we are trading headline to headline and we could change course faster than an Iranian gunboat. Noe Iran is backing off the  report as a Senior Iranian official Iran fired a warning shot against US warship to prevent its entry into the Strait of Hormuz, unclear whether there was any damage.

A successful “Project Freedom” could significantly ease surging U.S. gas prices by restoring stable oil flows through the Strait of Hormuz. By enhancing maritime security and reducing risks for tankers, it would alleviate supply bottlenecks that have driven crude oil prices higher. Increased crude availability would boost refinery throughput, expand gasoline and diesel inventories, and exert downward pressure on pump prices, especially as summer demand ramps up. Combined with potential OPEC+ output adjustments and diplomatic progress, this could reverse the 40%+ climb in gasoline prices seen since late February, fostering greater energy affordability and economic relief.

Recent refinery outages, strikes (or labor tensions), and maintenance have compounded the price surge by tightening domestic fuel supply. In the Midwest, unplanned and planned issues at major facilities—like BP’s 440,000-bpd Whiting refinery in Indiana (hit by a power outage causing unit shutdowns and flaring), Phillips 66’s 356,000-bpd Wood River refinery in Illinois (extended 45-day maintenance on its crude unit since late February), and Marathon Petroleum’s Robinson refinery (maintenance into mid-May)—have reduced regional output. These disruptions, alongside broader U.S. refinery capacity constraints from prior closures, have limited gasoline and distillate production amid already elevated crude costs from global disruptions.

According to AAA data as of May 4, 2026, national average gas prices stand at $4.457 for regular, $4.936 for mid-grade, $5.311 for premium, $5.641 for diesel, and $3.515 for E85. These compared to yesterday’s averages of $4.446, $4.931, $5.301, $5.642, and $3.494; a week ago at $4.111, $4.592,

This comes as OPEC Plus makes its first big decision without the UAE roll out a big, bold and bad . 188,000 barrel per day symbolic increase for June.  That will be impossible to deliver without US success of operation Project Freedom.

For traders, volatility is going to remain high as we move from headline to headline. One would have to imagine that if Iran really did start shooting missiles at U.S. warships, this war could escalate very quickly. My assumption would be that Iran’s oil infrastructure would be in grave danger of being attacked by the United States—not to mention other critical infrastructure in Iran. Iran is restricting access to an international waterway, and the US plans to stop these prolonged closures that have gone on long enough..

Nat gas futures are trading a bit higher this morning, up roughly 2-2.6% near $2.84–$2.85/MMBtu after settling around $2.78 previously. The move comes amid a lighter-than-expected storage build, softer production numbers, and solid LNG export demand providing some support.

The market remains in a broader range-bound environment with ample inventories, but near-term fundamentals are offering a modest tailwind. Fox Weather is calling for an unseasonable cooldown across the Northeast, Mid-Atlantic, Midwest, and into New England to kick off May. Temperatures are running 10-15°F below average with rain and even some overnight lows in the 30s in spots. This should sustain a bit of extra heating demand longer than normal and help moderate storage builds in the near term. Overall moderate demand is expected over the next week with cooler systems tracking through key population centers. Download the Fox Weather Ap as weather remains the key driver heading into shoulder season. Also stay tuned to the Fox Business Network! Invested in you! Call to get your account open at 888-264-5665 or email me at pflynn@pricegroup.com