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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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Not All It’s Cracked Up To Be. The Energy Report 10/12/2026

By On October 12, 2026 - 9:39 AM · In Market Commentaries, Phil Flynn Energy Report
Diesel is front and center in the energy debate this morning, and for good reason. American farmers, ranchers, and truckers have been paying the price at the pump for months, and President Trump has made clear that getting more barrels into the market is a priority—especially with the midterms around the corner. Lifting the Russian diesel export ban is an important step on the supply side. And while the oil flows through the Strait of Hormuz are back to normal the products have been low this is one of the things I have been saying for a month diesel is the critical fuel that is the biggest casualty from this war and the war that I’m talking about is the war between Russia and Ukraine not the war between I ran in the US and the rest of the civilized world. . .
It started as one of those classic Fox & Friends Weekend moments—lively, a little heated, and full of straight talk. Brian Kilmeade and Rachel Campos-Duffy went back and forth on President Trump’s push for an energy ceasefire with Russia and Ukraine, the diesel deal, and the pressure on Zelenskyy. The set had that upbeat energy even while the headlines stayed heavy. Lower diesel prices for American farmers, ranchers, and truckers still matter, especially heading into the midterms. And Trump reminded everyone, once again, that he warned Europe years ago about getting hooked on Russian energy. They laughed then. They’re not laughing now.
Campos-Duffy made the practical case: Zelenskyy keeps hitting Russian refineries after Trump asked him not to, especially before the midterms, and that is hurting an administration that has been generous. From her view, the diesel purchase is a direct response—Ukraine is dependent on U.S. support, so when the president says stop blowing up the diesel infrastructure, it should matter.
Kilmeade said that hHe put the responsibility squarely on Putin, called Russia the bad guys who started an unprovoked war, defended Ukraine’s right to strike the war machine bombing apartment buildings, and warned that working with Russia on diesel would be one of the biggest mistakes of the administration. He even called Putin the modern Hitler of our generation. Two different lenses on the same deal—one focused on American diesel prices and leverage, the other on who started the war and who should pay the price.
Of course we have to remember too that it was the leftist policies in Europe along with the green energy madness that put Europe in this difficult situation a situation where the United States oil producers have risen to the occasion to bail them out and now they are complaining even though they are the country that became more dependent on Russian oil.
Russia’s own restrictions, layered on top of Ukrainian strikes on its refining capacity, had already tightened global distillate markets. Allowing more product to move helps ease that pressure, even if the near-term volumes are limited by damaged refineries. Europe is pushing back hard against any easing of sanctions, arguing it gives Moscow more revenue for the war. But for years Europe grew more dependent on Russian energy while dismissing warnings about the risks.
The diesel crack spread has pulled back from those record highs, but don’t get too comfortable. Geopolitical risks are still running hot. Hurricane Isaias mostly spared Gulf Coast refiners—Chevron’s Pascagoula and others came through in good shape, and production shut-ins (which hit about 70% of Gulf oil at the peak) are reversing. That helped ease some product tightness.
Still, there’s real frustration in Europe over Trump’s move to ease sanctions on Russian diesel and push an “energy ceasefire” effective immediately. Trump wants no more attacks on each other’s energy facilities. Zelenskyy says Ukraine supports it if Russia does, but he’s waiting on details and notes Russia kept striking Ukrainian power plants (including in Kharkiv) right after the announcement.
 Moscow has been quiet. Trump has also called for new elections in Ukraine after criticizing Zelenskyy for missing deals and for the refinery strikes he says are driving up U.S. diesel prices. Markets are treating the whole thing with healthy skepticism—Russian refining capacity is already impaired, so any near-term diesel boost looks limited against global tightness.
Oil is still finding support from the Middle East this morning. Brent is trading around $105–106 and WTI near $92–93, both up roughly 1–2% and near two-week highs after reversing earlier softness tied to the Trump news
 Houthi attacks on Saudi Arabia over the weekend were the big driver. They hit Riyadh’s King Khalid International Airport hard—Saturday’s strike killed 13 and wounded hundreds; a follow-up Sunday hit killed at least one more and injured others. Houthis also claimed strikes on Aramco sites and other targets. That keeps the risk premium alive for Saudi infrastructure, Red Sea/Bab el-Mandeb routes, and any remaining Hormuz-area flows. Tanker incidents and broader U.S.-Iran tensions add to the uncertainty. Physical markets stay tight, and earlier inventory draws left little cushion.
Saudi Arabia is responding by looking to expand its pipeline capacity to destinations outside the Persian Gulf to 10 million barrels a day within two to three years, according to Energy Minister Prince Abdulaziz bin Salman. That includes upgrades to the East-West pipeline (currently around 7 million bpd capacity) and temporarily repurposing a gas line for crude. Smart resilience move while the region stays volatile.
In short, the market is pricing elevated Middle East supply risks more heavily than the uncertain prospect of extra Russian volumes. Headlines around Saudi assets and Hormuz continue to dominate near-term price action.
Natural gas has eased after the storm-driven bounce, trading near $3.12–3.13. Isaias shut in a big chunk of Gulf production (around 1.3 Bcf/d or nearly 60% at the peak), which gave the market a short-covering lift, but the overall impact was limited—offshore gas is only a small slice of total U.S. supply. Storage builds have been solid, weather looks mild, and LNG flows have been a bit softer. The real story this weekend was the outstanding job Fox Weather did covering the storm. Continuous coverage, field crews right in the teeth of the eyewall (shout-out to Robert Ray and the team braving it in places like Destin), meteorologists tracking every shift, and simulcasts that kept people informed when it mattered most. Professional, thorough, and calm under pressure—exactly what you want when a Category 3 is bearing down on the Gulf Coast. Great work by the whole Fox Weather crew.
Download the Fox Weather app here for ongoing updates, radar, and alerts. Stay tuned to the  Fox Business Network invested in you. Call to open up your trading account today by calling me at 888-264-5665 or by emailing me at pflynn@pricegroup.com.

Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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