The Coming Production War. The Energy Report 06/25/2026

As oil plunges to pre-war levels, with WTI attempting to fill the first-night-of-the-war opening gap, the longer-term ramifications of the U.S. actions against Iran—and the broader push to neutralize the Iranian nuclear threat—point to an emerging oil production war. This could usher in a new era of lower prices and help replenish oil inventories depleted by the war. The rise in dominance of US energy exports has created a reliable supplier monster that is having reverberations around the world and inside the OPEC cartel.

Already, the UAE has left OPEC, and Iraq appears to be following a similar playbook. Iraq is aggressively seeking more market share, calling on OPEC to increase oil supply to match its production capacity and population size, according to its Prime Minister. While the Iraqi government states it is not currently considering withdrawal, the Iraqi Oil Ministry notes a high level of understanding within OPEC for Iraq’s special situation. In other words, give us more market share or else.

Many OPEC members fear that the recent Strait of Hormuz shutdown could lead to a permanent loss of market share to the United States and other non-OPEC producers. This pressure could push the group toward the kind of maximum production stance Iraq has advocated.

 This comes as we continue to see positive developments from the US Iran ceasefire and it is  accelerating  oil market bets  to the return to a new normalcy.

 Staite talk from U.S. Energy Secretary Chris Wright  who yes day said that “ the last 24 hours, 72 ships carrying 20 million barrels of oil transited the Strait of Hormuz—close to pre-crisis levels”. He emphasized that even without a full agreement with Iran, the U.S. will guarantee safe shipments, and Iran will lose its ability to block the strait going forward. A return to full normalcy may take a few weeks yet it is happening much faster than many had feared .

Secretary Wright also highlighted strong upside from other fronts saying that Venezuelan oil exports could reach 2 million barrels per day (BPD) under this administration, and the Strategic Petroleum Reserve (SPR) could be creatively refilled back toward 500 million barrels.

Sadly, we also must pray for the people of Vennela that were impacted by two powerful back-to-back earthquakes struck the country on the evening of June 24, 2026 (local time)a magnitude 7.2 foreshock followed about 40 seconds later by a 7.5 mainshock. These were centered in the Yaracuy region (near areas like San Felipe and Yumare), and shaking was strongly felt in Caracas and across much of the country, with effects reported as far as neighboring nations.  Reports indicate at least 164 deaths and over 970 injuries as of the latest updates, with the toll expected to rise as rescue efforts continue amid rubble and aftershocks (over 20 reported). Many buildings collapsed in Caracas and surrounding areas like La Guaira. There was widespread structural damage, including to homes, infrastructure, and Caracas’ main airport (Simon Bolivar International), which was closed. Power outages, disrupted services, and a state of emergency have been declared. Classes were canceled, and rescue operations are ongoing. Our thoughts and prayers are with the people of Venezuela during this difficult time.

 This came as Venezuela exports had  hit a 7-year high of around 1.25 million barrels per day (bpd) in May—driven by buyers including the US, India, and Europe. Production targets aim for ~1.3 million bpd by year-end.

 The earthers should not derail that progress as the initial assessments show limited direct damage to core oil infrastructure Reports say that major oil hubs like those around Lake Maracaibo reported no immediate injuries or major issues.

The El Palito refinery (near the epicenter area) had no reported damage. The key production/export facilities appear largely unaffected so far, as the hardest-hit urban areas (e.g., parts of Caracas) are not primary oil centers.

Still prolonged power outages could temporarily disrupt operations, pumping, or processing until electricity is restored. Damaged roads, ports, or the airport might slow exports or maintenance in the short term. Oil markets will be watching for updates from PDVSA, the oil ministry, and partners like Chevron. Any sustained disruption would be notable given Venezuela’s role in global supply,

On the demand side, $70 oil could help put India back on track for 7% economic growth in the coming fiscal year, supporting global consumption as supply expands.

While President Trump has voiced frustration that pump prices haven’t fallen quicker,  my buddy Pat DeHahn at gas buddy says that they are declining at a faster pace than after the 2022 peak under President Joe Biden. GasBuddy data shows that the national average is currently falling at 1.94 cents per gallon per day—faster than the 1.84 cents per gallon per day rate seen in 2022 when prices dropped from $5.02 to $3.99.

This breaks the typical “rockets and feathers” pattern where declines lag, thanks to higher refinery runs boosting gasoline supplies, streamlined permitting and operations easing bottlenecks, and improved market flexibility that allows physical barrels to move more efficiently through the system. As a result, wholesale RBOB futures and retail prices are adjusting downward more responsively, delivering relief to drivers sooner than in prior cycles. Still, it is never fast enough and President Trump is frosted but they trends suggest that gas and diesel prices will continue to fall so hang in there Mr, President! It’s happening.

Looking ahead, the combination of restored Hormuz flows, Venezuelan ramp-up, SPR rebuilding, non-OPEC gains, and potential OPEC+ production competition sets the stage for ample supply. This production war dynamic should keep a lid on prices even as global economies like India regain momentum. WTI near $70 reflects this new reality—plenty of oil, strategic wins for U.S. energy dominance, and relief at the pump that is building faster than many realize.

The flip side is that many remain concerned despite falling oil and product prices. The U.S. Strategic Petroleum Reserve is near 331–340 million barrels, its lowest level since the early 1980s, after major draws tied to the Iran conflict. Commercial crude inventories, excluding the SPR, are around 412 million barrels, about 7% below the five-year average, with Cushing especially tight. Total U.S. crude and product stocks excluding the SPR are also at multi-year lows, with some reports citing the lowest levels in 22 years.

Refineries are also running near 96% utilization to keep the world supplied, adding more pressure to inventories. Even with WTI back below $70, thin stocks and a depleted SPR limit the downside unless a major glut develops, while any geopolitical flare-up could quickly add upside risk. An OPEC production war could still create an ample-supply case if peace holds and output ramps smoothly, reinforcing U.S. energy dominance and pump-price relief. But low SPR levels, below-average commercial inventories, and execution risks leave little margin for error. That points to range-bound prices, bouts of volatility, stronger product cracks, and caution against assuming endless downside.

But just to reflect on where we’re at keep in mind that I have said before that wars more often than not are selling events for the price of oil and that is proven true even with the biggest supply shock in history I think you have to credit the trump administration for the way that they managed this very successfully not allowing this spike in oil prices to feed into a global economic crisis and now with the break in oil prices we’ll probably see downward pressure on inflation going forward but this is the case that I see right now is that oil prices will start to fill the gap and meander and build the base and move higher on strong economic growth which will be good for both the consumers and the producers so in other words if president trump pulls this off where we get Iran without nuclear weapons and not killing their own people not killing their neighbors and if we get a peace deal and calmness in the Middle East this could be a real one for the global economy in the world and I think the oil market is reflecting that optimism..

 Many has it been raining in Wisconsin , and we even had a short Tornado Warning as my Fox Weather Ap went crazy In Fact Natural gas prices are under pressure as heavy rain and cooler-than-normal temperatures curb cooling demand and support storage builds.

The market is watching today’s EIA storage report, with consensus near a +66 to +67 Bcf injection for the week ending June 19, below the five-year average but still a solid seasonal build. Last week’s +73 Bcf increase lifted storage to 2,759 Bcf, 29 Bcf below year-ago levels but 151 Bcf, or 5.8%, above the five-year average.

A lighter build could be supportive, especially with production showing some moderation and LNG exports holding near 17 Bcf/d. Cooler weather across the northern and central U.S. is limiting near-term power demand, but forecasts show heat building across the Midwest, South, and West into early July, which could boost cooling demand. July NYMEX natural gas futures are trading around $3.28–$3.31/MMBtu, helped by hotter 8- to 10-day outlooks and pre-report positioning.

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