About The Author

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

Visit Website →

The Ceasefire That Wasn’t. The Energy Report 08/17/2026

By On August 17, 2026 - 9:19 AM · In Market Commentaries, Phil Flynn Energy Report
Here’s the big question hanging over the markets today: If a tree falls in the forest… how can a ceasefire expire when one side says it never had an expiration date in the first place?
Iranian officials, including Foreign Minister Abbas Araghchi, say there was never a 60-day ceasefire that needed to be extended. In their view, the Islamabad Memorandum of Understanding signed in mid-June ended the war outright; it was not a temporary pause. The United States and others, however, treated the 60-day period—which ended today, August 17—as a window for negotiations. That window has now closed without a final agreement. Meanwhile, tanker tracking suggests traffic through the Strait of Hormuz is under renewed pressure, even before accounting for vessels operating with limited tracking signals.
Both sides have spent weeks accusing the other of breaking the agreement. Iran points to U.S. strikes, the naval presence near the Strait of Hormuz, and other military actions. Washington points to Iranian attacks on commercial vessels. Put simply, this was always a fragile arrangement—and the calm never fully took hold.
Now Tehran is turning up the pressure. IRGC Political Deputy Brigadier General Yadollah Javani said Iran’s posture has been defensive so far, but that it could shift to an offensive stance. Under new directives connected to Supreme Leader Mojtaba Khamenei’s recent appointments, Iranian forces say they are prepared to use “transformative approaches,” deliver “strategic surprises,” and take whatever steps they consider necessary to neutralize threats—including action on an adversary’s territory. That raises the risk of Iranian-linked attacks and a broader regional escalation.
Oil prices are edging higher as traders weigh that uncertainty. This morning, WTI is trading in the low $82 range, while Brent is in the upper $88s. The market is watching shipping through Hormuz and looking for any sign of a fresh disruption. Prices are still well above year-ago levels, which shows how much geopolitical risk is already built into the market even without a major new outage.
There’s another geopolitical development worth watching. President Trump ordered a major reduction in the annual Ulchi Freedom Shield exercises with South Korea just as they were about to begin. He cited the cost, his “very good relationship” with North Korean leader Kim Jong Un, and South Korea’s decision not to support U.S. efforts involving Iran. The exercises—a longstanding part of deterrence on the Korean Peninsula—will still take place, but on a smaller scale.
What does this mean for energy markets? The Islamabad framework is effectively stuck in limbo. Iran is signaling that it is prepared to go on the offensive, shipping through the Strait of Hormuz remains vulnerable, and the Trump administration is adjusting its military posture on several fronts at once.
For traders, the key things to watch are new statements from Tehran, transit data from Hormuz, and the tone coming from both Washington and Tehran over the next few days. Whatever label the two sides use, the agreement may never have had a clear expiration date—but the market is treating the current moment as a turning point.
At the same time, Middle Eastern producers are still moving large amounts of crude out of the Persian Gulf. Bloomberg reports that oil is being ferried through the Strait of Hormuz and transferred to tankers in the Gulf of Oman, with volumes running above market estimates of 4 million barrels a day.
That shuttle trade—along with pipeline workarounds, stockpile releases, and softer demand—has helped contain the economic fallout from the war. It is also one reason Brent futures have remained between $80 and $90 a barrel instead of moving sharply higher.
In other words, the region’s producers are finding ways to keep oil flowing despite the conflict. That has eased fears of a supply shock and an energy-driven jump in inflation, even as the war continues.
The operation is far from routine, however. Some vessels are crossing with limited tracking visibility and transferring cargo offshore, even as attacks on ships continue. People familiar with the shipments say the system is operating at full speed.
These discreet crossings have become an important lifeline for global markets, which had feared a much larger supply shock when the Iran war began. Still, conditions are anything but normal. Vessels continue to face repeated threats, even when they have some military protection.
The shuttle system has been operating for months, but no one has a perfect picture of the volumes involved. Many of the vessels provide little location data for security reasons, making the trade difficult for analysts to track. Sources familiar with the activity say flows are higher than the market’s estimate of 4 million barrels a day, though they have not provided a precise figure.
By transferring crude between vessels in the Gulf of Oman, tankers can reduce the need for fully loaded ships to make a conventional passage through Hormuz.
Before the war, roughly 20 million barrels a day—about one-fifth of the world’s oil supply—moved through the Strait. Last week, U.S. Energy Secretary Chris Wright said average traffic had reached 9 million barrels a day over the previous seven days. That figure surprised many traders and would put flows at nearly half of their prewar level.
While crude digests the “ceasefire that wasn’t,” natural gas is telling a completely different story. Front-month Henry Hub futures are sliding again this morning, trading near $2.65–$2.66, down roughly 2.5–3% and hovering close to the lowest levels seen since mid-April. The market is being weighed down by robust U.S. production, comfortable inventory levels, and a storage surplus that just won’t quit. 
Last week’s EIA report showed a 36 Bcf injection for the week ended August 7—larger than the 31 Bcf consensus and above the five-year average of 33 Bcf. That widened the seasonal surplus further. Add in ongoing LNG maintenance that has kept feedgas demand softer than it would otherwise be, and the bearish case remains firmly in control. Prices have dropped more than 7% over the past month and sit roughly 8% below year-ago levels.
Record output and the storage overhang are simply overpowering whatever residual weather-driven power burn is still left in the late-summer schedule. The August STEO already dialed back the third-quarter Henry Hub forecast to $2.87, and the market is acting like it believes the surplus can stick around into the fall.
Looking at the broader weather picture that Fox and the national models are highlighting, we’re in a more typical late-August setup rather than an extreme heat dome. Much of the central and eastern U.S. sees highs in the upper 70s to mid-80s with pockets of humidity, while the South and West remain warmer. Scattered thunderstorm chances are on the board for parts of the Midwest and Northeast over the next couple of days, with some progressive systems possible midweek.
Nothing in the current outlook screams massive incremental power-burn demand that would reverse the natural-gas slide overnight. Milder nights and the usual late-summer pattern shifts are the more dominant theme for now. Traders will keep one eye on any tropical development in the Gulf or Atlantic, but the immediate focus remains the structural supply surplus.
ine: Oil is carrying the geopolitical risk premium from a ceasefire that both sides claim never really was, while natural gas is still buried under production and storage. Watch Hormuz transit data and any fresh statements from Tehran for the next move in crude. For gas, the path of least resistance remains lower until something meaningfully changes the supply-demand balance.
Download the Fox Weather ap and stay tuned to the Fox Business Network and call to open your account at 888-264-5665 or email me at pflynn@pricegoup.com.

Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

2918 S. Wentworth Ave. FL 1, Chicago, Illinois 60616

312 264 4364 (Direct)  |  888 264 5665 (Direct)  |  800 769 7021 (Main)  |  312 264 4303 (Fax)

www.pricegroup.com

Please do not leave any instructions for orders in your message, as we cannot execute instructions left through email or voicemail. Orders must be entered via direct verbal communication with a representative of our firm. We cannot be held responsible for orders left in any other manner.  PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Investing in futures can involve substantial risk & is not for everyone. Trading foreign exchange also involves a high degree of risk. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses. Member NIBA, NFA.

Questions? Ask Phil Flynn today at 312-264-4364        
Tagged with: • • • •