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Phil Flynn

Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665

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“I’ll see your Reparations and Raise you” The Energy Report 08/11/2026

By On August 11, 2026 - 9:13 AM · In Market Commentaries, Phil Flynn Energy Report
Iran wants the United States to pay war reparations as the price for reopening the Strait of Hormuz. President Trump called their bluff and raised them. President Trump made it clear that Tehran should be the one writing the checks — for 47 years of terror acts and decades of American lives lost and damage done. Yet while Iranian officials said they will not open the Strait of Hormuz ,or in realty terrorizing it, hitting ships and innocent civilians until Washington ends the blockade of Iranian ports lift sanctions released in frozen assets on top of compensation ,Trump called the demand an “interesting idea,” then instructed his negotiators to demand the opposite: compensation from Iran for Americans killed and wounded by roadside bombs and conflicts over the last half century, plus payments to the families of Iranian protesters.
And yesterday the flare up caused oil prices to surge on the perception that there is going to be no way we’re going to get a negotiated end to this drama this morning oil prices pulled back a bit headlines Bitcoin farmers foreign minister said negotiations between Oman and Iran are in an advanced stage and dropped even further after reports came out that Pakistan’s interior minister arrived in Iran for talks.
Once again, this shows that the market cannot get too comfortable with the perception that peace talks are going well—or that they are going badly. Iran’s proxies also struck a ship in the Bab el-Mandeb Strait overnight, showing that the Houthi rebels are trying to regroup with support from their Iranian allies. Tensions reduced traffic through the Strait of Hormuz to just six ships yesterday, according to Reuters. Four commodity vessels entered the Persian Gulf through the strait, while two others exited. Reuters said the inbound traffic included two empty product tankers and a small LNG carrier, while a tanker carrying residual fuel left the Persian Gulf. Even with the Houthi attack in the Red Sea, I counted 24 vessels transiting the area, which is roughly in line with what we have seen over the last 10 days.
And while oil prices are the focus for many it is the diesel crack spread that again is approving record highs as it is fighting a war on many fronts as Russia’s infrastructure continues to get pounded by Ukraine. It is because Ukraine has stepped up its campaign against Russian oil refineries, hitting four plants in two days on top of five last week — some more than 2,000 kilometers from the border.
 Russia is a major diesel exporter that Europe and Asia look to. Every successful strike removes middle-distillate barrels from the global pool. We have seen what that does to diesel cracks. In 2022, after the full-scale invasion, the Brent–ULSD spread traded above $95 a barrel and briefly pushed past $100. European gasoil cracks spiked past $80. Those were not normal times, and the market is flirting with the same setup again: constrained Russian refining, thin inventories, and no spare capacity to absorb another shock.
Diesel sits at the sharp end of this risk. Trucking, shipping, agriculture, and industry all run on middle distillates. When Russian product exports tighten, the crack spread is the first place the market feels the pain. History shows those moves can be violent.
Elsewhere, Libya’s National Oil Corporation warned it could declare force majeure and shut the Zawiya refinery completely if drone attacks continue. The first laden Qatari LNG cargo since July 11 finally discharged after idling in the Gulf of Oman, while UKMTO reported a new tanker-military incident in the same waters. Florida energy player Harry Sargeant III is selling his stake in Venezuela’s second-largest oil producer after a pressure campaign. And Uniper is looking to sell data-center power assets in the UK and Germany on the back of AI-driven electricity demand — another structural bid for natural gas.
So, while Iran wants reparations. Trump wants them the other way. Hormuz stays closed longer. Ukrainian drones keep hitting Russian refineries. Diesel cracks already know how to trade above $95 when that combination hits. The market has been treating these risks as manageable while many are fearing otherwise. What does the market know that we do not?
The market till suggests that the United States still holds the stronger hand despite many saying otherwise.
The market is betting on. American energy dominance, naval power, and economic leverage have not gone away.
The market is betting that pressure works, that Iran eventually has to deal from a position of weakness, and that the Strait will reopen on terms far closer to Washington’s than Tehran’s.
Every day the blockade and sanctions grind on is another day the Iranian economy feels the pain. The same market that priced in the risk is also pricing in the eventual American win. History has a way of rewarding that kind of confidence.
Obviously, the rise in the crack spread is a point that is going to be tough, as it could signal a move higher in gasoline and diesel prices, which—believe it or not—had been easing. In fact, just as it looked like gas was going to fall back below $4.00 a gallon on a national average basis, the spike stooped the downtrend sowed Regular currently averages $4.0116 (up from $4.0091 yesterday), mid-grade $4.5217 (up from $4.4997), premium $4.9058 (up from $4.8900), diesel $5.3213 (up from $5.2996), and E85 $3.0731 (up from $3.0645). A week ago, those same grades stood at $4.0892, $4.5890, $4.9732, $5.3715, and $3.1331. A month ago they were $3.8824, $4.3951, $4.7744, $4.8769, and $2.9643. A year ago, the averages were $3.1387, $3.6087, $3.9705, $3.7103, and $2.5332.
Obviously with the tightness and diesel around the globe that’s still the soft spot I’ve been getting a lot of calls about hedging in and locking in prices for winter for heating oil probably not a bad idea due to the tight supply even though the back end of the curb looks cheaper you could use that as an opportunity but which supplies being tight if we get a cold winter you could see a pretty good price spike for heating and oil this winter probably a good idea to lock it in.
Natural gas prices got a little bit of a pop this morning as Fox Weather is now starting to look hard at tropical activity—not only storms in the Pacific, but potentially in the Atlantic as well.
We’re watching an area of low pressure about 500 miles southwest of the Cabo Verde Islands. The National Hurricane Center gives it a solid 70% chance of becoming a tropical depression later this week as it tracks west to west-northwest across the central Atlantic. If it gets a name, we’re looking at Cristobal. There are a couple other waves being monitored too, so the basin is finally waking up as we head into the heart of the season.
Over in the Pacific, there’s also a system with a high chance of development that could head toward Hawaii later this week. Anytime you start seeing these tropical threats light up, the natural gas market takes notice. Storms can disrupt Gulf production, spike power demand for cooling, or mess with LNG exports—any one of those can put a floor under prices or give them a lift.
Download the Fox Weather app and stay locked in. They’re tracking every twist and turn, and so am I. In the energy markets, weather is never just weather, it’s a price driver. Also stay tuned to the Fox Business network Invested in you! Call today to get the trades the plan and special reports by calling 88-264-565 04 email pflynn@pricegroup.com

Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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