From Anxiety to Apathy and Back Again. The Energy Report 06/10/2026

Oil prices have shifted from anxiety to apathy and back again amid renewed skirmishes between the U.S. and Iran, restraint, negotiations and  back again, And  while President Trump continues to show incredible restraint the market this morning is wondering whether his patience is wearing thin after comments by the President that Iran is taking too much time to make up its mind. Now reports say that president trump is thinking about issuing new strikes on Iranians nuclear power sites telling Fox News that ‘He’ll keep going on Iran,

Yesterday crude prices popped on initial headlines of U.S. retaliatory strikes against Iranian targets following the downing of a U.S. Apache helicopter near the Strait of Hormuz. They quickly pulled back as traders digested the limited, proportional nature of the operation.

While many oil bulls grow frustrated that President Trump isn’t simply wiping out what remains of Iran’s capabilities, his vision appears to use the blockade as leverage. At the same time, he is working to increase oil flows out of the Strait of Hormuz and give countries time to develop workarounds.

This has kept downside pressure on oil and gasoline prices at the pump.

 Today despite the dust up Qatari negotiators traveled to Tehran Wednesday morning to help finalize an agreement after consultations with the U.S.

Yet today a report that an US official with knowledge of the situation reported that President Trump stated Iran “will have to pay the price” for dragging out negotiations on a deal that would have been great for them. He also described Iran’s military as “a complete and total mess,” noting that much of it — including its navy and air force — doesn’t even exist.

The Wall Street Journal detailed that, according to U.S. Central Command, President Trump directed a targeted, multi-wave response focused on Iranian air defenses, radar sites, and ground control stations near the Strait. The operation was framed as self-defense, lasted several hours, and responded directly to the drone strike on the Apache. The President had initially downplayed the incident earlier in the day, calling it “wasn’t a big deal” and noting the pilots were not seriously injured. He only authorized action after updated briefings from Defense Secretary Pete Hegseth and Joint Chiefs Chairman Gen. Dan Caine.

This calibrated approach signals restraint. The U.S. emphasized precision and proportionality rather than broad bombing campaigns. Iran’s response — a drone attack on the U.S. Fifth Fleet in Bahrain and some missile activity — was met with defensive intercepts by regional partners, with no reports of major escalation or U.S. casualties. Iranian Foreign Minister Abbas Araghchi described the helicopter incident as a possible “accident” or “crossfire” while vowing to answer threats, but stopped short of promising all-out retaliation. Maybe he should have just called it a big “oops.”

Yet the Energy Information Administration in their Short-Term Energy Outlook suggests that the global oil market remains on edge under the assumption that the Strait of Hormuz will stay mostly closed in the near term.

EIA says that shipments are expected to resume sometime in the third quarter of 2026, but it will likely take several months to ramp back up to normal levels — we’re not looking at full recovery until early 2027. Some Middle East oil production could stay disrupted even beyond that.

This limited shipping has already forced producers in the region to cut crude output by more than 11 million barrels per day in May compared to pre-conflict levels. The result has been big draws on global inventories as the world tries to meet ongoing demand. Looking ahead, we expect those inventories draws to average about 6.3 million barrels per day in the second quarter of 2026 and 7.6 million barrels per day in the third quarter. OECD inventories are forecast to drop to their lowest levels since 2003.

High fuel prices and reduced availability, along with government efforts to conserve, have already lowered oil demand. We now expect global oil demand to fall by 1.1 million barrels per day over the course of 2026 compared to 2025 levels (when it averaged 104.0 million b/d). That’s a sharp turnaround from earlier forecasts that called for modest growth. Demand should rebound in 2027 as supplies normalize, growing by about 2.5 million barrels per day to reach 105.3 million b/d.

Despite the production outages and shrinking inventories, Brent crude prices actually fell in May on lower demand and hopes for a U.S.-Iran agreement. But with the strait largely blocked for now, falling inventories are expected to support Brent prices around $105 per barrel in June and July. Once flows resume and shut-in production comes back online, prices should ease to an average of about $79 per barrel in 2027.

Higher global crude prices are feeding through to U.S. wholesale product prices. Diesel and jet fuel are seeing the biggest jumps — up more than 60% in 2026 and 40% in 2027 versus earlier pre-conflict forecasts. Wholesale gasoline prices are projected to rise around 50% in 2026 and nearly 40% in 2027. On the trade side, the disruptions have boosted demand for U.S. supply. U.S. net exports of crude and petroleum products hit a record 5.8 million barrels per day in April and stayed near that level in May. We expect strong diesel and jet fuel exports in particular, with overall net exports averaging 4.2 million barrels per day for the year — up 1.4 million barrels per day from 2025 according to EIA.

All these headlines of course is keeping the market on edge but one can’t deny the market action seems to be trending down the news of strikes against Iran have had limited upside movement because at this point the conflict doesn’t seem to stop to trend up more supplies coming online I think a lot of people are underestimating the increased production from the United States and other non that countries that has been coming online and may be under reported it is widely known that the Energy Information administration’s production numbers generally get adjusted later on and I am predicting that we’ll see a big upward revision in U.S. oil production in the coming weeks.

Natural gas futures came under fresh pressure this week as the July contract posted three straight session declines totaling 19.8¢, or roughly 6%, with technical resistance capping gains, late-June weather forecasts moderating, and depressed production beginning to recover toward monthly highs. My good friends at EBW Analytics note that near-term momentum is clearly receding, though upside chances have not been entirely ruled out. Technical support levels have held firm on multiple tests, daily demand is set to rise into Thursday, LNG feedgas demand is bouncing higher, and the latest EIA storage reports continue to trend in a constructive direction. Over the longer term, however, the deck remains stacked in favor of lower prices, with an elevated storage trajectory, a probable production surge into late summer, and El Niño patterns expected to moderate summer weather outcomes all tilting the balance toward softer pricing. In the near term, supportive spot pricing at Henry Hub and these short-term fundamentals should help keep the market in a range-bound pattern over the coming weeks. On the weather front, Fox Weather is closely monitoring building heat across the southern and eastern U.S. in the days ahead. Meteorologists are urging folks to download the Fox Weather app for the latest updates, real-time alerts, and personalized forecasts so families and businesses can stay prepared as temperatures climb. This comes as EIA just dropped their latest Short-Term Energy Outlook, and it paints a pretty straightforward picture for natural gas and power markets this summer and beyond.

 The benchmark Henry Hub price (that’s the main U.S. natural gas price everyone watches) ticked up just a bit in May. Why? Warmer weather cranked up demand from power plants that needed extra gas to keep the air conditioners humming. Even so, the EIA sees natural gas prices staying relatively flat through most of 2026. The reason is simple: supply is growing faster than demand. We’re pumping more crude oil thanks to higher prices, and that brings a ton of “associated gas” out of the ground right along with the oil. That extra supply keeps a lid on prices. But things could heat up in the second half of 2027. Power companies are going to need more gas to make electricity, and U.S. exports of LNG keep growing strong. That combo should push Henry Hub higher. The forecast calls for about $3.34 per MMBtu in the second half of 2026 and $3.55 in the second half of 2027. Nothing crazy, but a nice little uptick for producers if it plays out. Electricity This Summer – Renewables to the Rescue This summer is shaping up hotter than normal, and that means Americans are going to use more juice. The EIA expects total U.S. electricity generation to run about 3% higher than last summer. Who’s going to supply all that extra power? Mostly the green crew: Solar is forecast to jump 19%Wind should rise 10%

Coal, on the other hand, gets squeezed again — down about 2%. Natural gas-fired generation stays basically flat compared to last summer. The power grid is leaning hard on renewables to handle the extra demand while coal keeps getting pushed to the side. Bottom line: Plenty of supply keeps natural gas from running away on the upside in the near term, but growing power demand and exports should give prices a gentle lift down the road. Summer heat is here, so keep an eye on those storage numbers and power burns — they’ll set the tone for the rest of the year.

So make sure you download the Fox Weather Ap to keep up with the heat and stay tuned to the Fox Business Network ! Call to open your account at 888-264-5665 or email me at pflynn@pricegroup.com

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