Mutually Agreed. The Energy Report 05/06/2026

Is the US Iran war almost over?  Oil prices are acting like they believe it is  as prices tank we may be close to the top in retail gasoline prices.  Axios is reporting that the White House believes it’s getting close to an agreement with Iran on a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations, according to two U.S. officials and two other sources briefed on the issue. Now Pakistan is confirming but “Nothing agreed yet US sees Iran response in the next 48 hours.” This comes as Iran has indicated a willingness to negotiate, with China urging them to reach an agreement as the oil spike is creating big problems for China’s economy.  Now Iran’s Revolutionary Guards Navy,  is saying that with the end of ‘threats from aggressors’ and in light of new procedures, safe and stable transit through the strait will be post according to Iranian State media.

And despite very bullish data from the American Petroleum Institute showing massive reductions in US petroleum supplies  oil prices declined and they really plunged after President Trump announced that Iran and the United States have agreed to a temporary pause on Project Freedom shipping through the Strait of Hormuz—even as the blockade stays rock solid in place!

The oil market was already wobbling after the U.S. hinted at easing restrictions to let ships safely pass through the Strait of Hormuz, but things really took a nosedive after President Trump dropped his Truth Social bombshell, stating:

“Based on the request of Pakistan and other Countries, the tremendous Military Success that we have had during the Campaign against the Country of Iran and, additionally, the fact that Great Progress has been made toward a Complete and Final Agreement with Representatives of Iran, we have mutually agreed that, while the Blockade will remain in full force and effect, Project Freedom (The Movement of Ships through the Strait of Hormuz) will be paused for a short period of time to see whether or not the

And let’s face it, pressure is mounting on Iran as the U.S. blockade squeezes its economy and China pushes for a breakthrough. China’s Foreign Minister Wang Yi is urging Tehran to keep talking and secure a real peace deal with the U.S. Meanwhile, Iranian strikes on the UAE and skirmishes in the Strait of Hormuz are ramping up, prompting Wang to declare that a ceasefire can’t wait any longer.

China’s Foreign Minister Wang Yi and Iran’s top diplomat Abbas Araghchi were  hashing out strategies just as the world braces for the Trump-Xi showdown. Araghchi  said that Tehran is pushing for a deal that’s not just big, but fair, as they try to bring the Middle East drama to a close. Speaking in Beijing, Araghchi doubled down on Iran’s determination to defend its legitimate rights and interests, stressing that only a broad, just deal will do.

Yet could opposition in Iran domestically be also pressuring Iran into a deal. Local sources in Iraqi Kurdistan reported explosions at the Sordash camp in Sulaymaniyah, where the headquarters of anti-Iranian separatist groups were targeted by drone strikes, according to Sabrin News and Fars News. This incident is consistent with Iran’s ongoing pattern of operations against opposition Kurdish groups based in Iraqi territory, as Tehran frequently views these camps as threats amid escalating regional tensions. At the same time, Iranian media noted explosions in Qeshm Island, Bandar Abbas, and Bushehr—strategic regions near the Strait of Hormuz and vital energy infrastructure. Together, these events underscore the increasing internal and external pressures on Iran, as it grapples with attacks and disruptions in its southern core while facing broader hostilities throughout the region.

And petroleum bulls are frustrated as oil prices fall despite API data showing substantial draws as US energy dominance was on full display as we exported a record amount of petroleum.  The API reported a massive 8.1-million-barrel drop in crude stocks for the week ending May 1—far exceeding the expected 2.8-million-barrel decrease and last week’s 1.79-million-barrel drop. Gasoline fell by 6.107 million barrels, and distillates by 4.642 million barrels.   Yet oil unmoved by the numbers as they see something more historic behind that drop but a vote of confidence that the US can rise to occasion as the world’s most reliable energy producers and as it takes it place as the world’s new swing producer, And if we remove the Iranian oil terror premium we could enter an era of low energy prices.

  So is the market wrong? Many analysts are warning that the oil markets  are way too complacent.  Veteran investors like George Noble are seeing what they see as clear disconnect: the physical oil market reflects real wartime constraints, while paper markets (futures) appear to price in a quick peace. “The physical market is pricing a war. The paper market is pricing a peace deal,” he noted—one of them is wrong. Analysts at firms like J.P. Morgan and others have pointed to a geopolitical risk premium of $4–$10 per barrel, but many see it as insufficient given ongoing uncertainties around infrastructure damage, chokepoints, and potential renewed escalation.

 They warn that oil  companies and producers in the Gulf have curtailed output dramatically due to the Strait closure and attacks on infrastructure, with global supply losses described by the IEA as the largest disruption in history.  Even with some optimism around cease-fires, the physical realities on the ground warn that risks remain elevated. They warn that in roughly 50 days of intensified conflict, the world has lost an estimated $50 billion worth of oil—equivalent to more than 500 million barrels not produced, according to Reuters analysis and data from firms like Kpler.  They point to the fact that  Gulf Arab producers have seen crude output slashed by around 40% in March alone, with broader estimates of 8–11 million barrels per day (bpd) shut in at peak disruption.  They say that even if the war ended today, getting production back to normal won’t be quick.

Industry experts are worried about  restarting wells, mending infrastructure like refineries, pipelines, and LNG facilities, and reopening shipping lanes will require patience and careful effort, these steps are all part of a steady, determined path forward. Though the process may span months rather than days or weeks, their commitment to restoring energy flows remains unwavering, offering hope for a brighter, more stable future.

They warn that heavier crude fields in places like Kuwait and Iraq could require 4–5 months to normalize. They say that regional energy infrastructure restoration (including refineries and complexes like Qatar’s Ras Laffan) could stretch into years due to damage. The general rule from experts like Rystad Energy’s Claudio Galimberti: recovery time roughly matches the outage duration. With multi-month disruptions, expect another similar period of ramp-up, with nothing significant restarting before May in optimistic scenarios. Wells shut for extended periods risk reservoir damage, requiring careful, coordinated restarts to avoid collapse—potentially taking weeks per field, with 1–2 million bpd possibly permanently impacted.

Yet on the flipside  that means that if the war is over the market can look ahead and  these predictions fail to take into account the rise of the US as the world’s new supplier of oil as last resort, and a swing away from power of the OPEC Russian collusion machines with the exit of the UAE into the US as a dominate global swing producers.  Now if we get peace and Iran with no nuke and no incentive to support terror and with success in Venezula the global energy map will reflect a new era of peace and prosperity backed in part by the Untied Staes move towards energy dominance.  A historic achievement that will benefit American’s and the world for generations to come

Natural gas may be too complacent, especially as Fox Weather issues warnings about a “triple threat”—a massive cold front expected to bring severe storms to the Central US, heavy rain to the Northeast, and snow to the High Plains.  Fox Weather on the app says that a sprawling system also has the potential to cause significant air travel delays in the eastern and Central US, as well as Denver, as the front drags across the nation through the week. Nat gas traded mixed-to-lower today on ample supplies and shoulder-season demand. June futures hovered around $2.75–$2.78/MMBtu, down modestly early in the session as LNG feedgas flows eased slightly amid maintenance while production remains robust.

The market continues to digest last week’s solid EIA storage build (+79 Bcf) that left inventories well above year-ago and 5-year average levels. Bearish inventory overhang and mild spring weather are capping upside, though supportive LNG exports and occasional power burn provide a floor and Fox Weather reports mean heaters will be on..

Technical action shows prices consolidating in the low $2.70s after a brief push higher on cooler forecasts last week. Support sits near $2.65–$2.70 with resistance at $2.85–$2.90.  Still oner all the Fox Weather says that models point to moderate demand in the near term with cooler-than-normal systems tracking across the Midwest, Ohio Valley, and Northeast over the next 7–10 days. Overall U.S. demand looks balanced to slightly supportive, but nothing extreme as we head deeper into injection season. Watch for any shifts toward hotter summer patterns that could boost power burn later. Stay nimble—fundamentals favor range trading until weather or LNG flows deliver a clear catalyst.  Any weather change can give us a pop with the short interest so download the Fox Weather app and stay tuned to the Fox Business Network. Also make sure you get signed up with me by calling 888-264-5665 or email me at pflynn@pricegroup.com