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War Headline Whiplash: War or No War? The Energy Report 10/29/2026

By On October 29, 2026 - 10:58 AM · In Market Commentaries, Phil Flynn Energy Report
Forget the Fed. This oil market is being driven by one binary: an intense, final blow against Iran versus a sudden peace push. That dynamic is unfolding as traders also weigh new talk of Russia-Ukraine peace talks and as the EU has a rare flash of energy reality. The European Commission is finally sounding the alarm over the wave of oil refinery closures across the region in the past 20 years. “We need to counter this trend,” EU Energy Commissioner Dan Jørgensen said. “This crisis is a wake-up call.”
Yesterday In the morning it was all about war—US forces reportedly telling Gulf partners to prepare for a short, intense campaign after the November 3 midterms, Houthi missiles flying, and supply fears flaring.
Then word came of Vice President JD Vance reaching out to Iranian hardliner Mohsen Rezaei (Supreme National Security Council chief and longtime IRGC figure) with a letter aimed at restarting talks. Which is the wartime hokey pokey where they put the war premium in they put the war premium out they put the war premium in and they shake it all about. Let’s him Brent down about 1.1% overnight and WTI down about 1.3% pairing the big spike yesterday on the hopes advances outreach and qua Qatari mediators floating the new draft might keep the war at Bay and keep the risk premium down
Of course, there’s many that are frustrated with this headline whiplash there’s a lot of complaints that President Trump should just finish the job and that you can’t negotiate with these hardliners in Iran. Of course, there’s another sense that you might have to deal with the devil you know.
Treasury Secretary Scott Bessent repeated that there is a big correlation between yields and oil prices. He is right.
The elevated crude market—Brent near $114, WTI near $101–102—has fed into inflation and kept longer-term Treasury yields higher.
That is part of why the Fed held at 3.75–4% yesterday with inflation still elevated. When oil is bid by the Middle East conflict and the successful squeeze on Iranian exports under Operation Economic Outcast, yields stay under pressure on the upside. The other side of the correlation is what Bessent has flagged before: once the conflict eases and oil drops (he has talked about a potential move toward the $40–50 range as Iranian barrels stay offline and later oversupply hits), yields should follow lower.
The dollar squeeze on Iran—Bessent noted Tehran cannot easily access dollars and proxy funding is declining—supports the near-term oil risk premium. But it also sets up the eventual reversal if the pressure holds and a deal or de-escalation materializes.
The Houthi front keeps the floor under prices. The Saudi-led coalition said it destroyed a ballistic missile aimed at the kingdom’s eastern region, while Houthis claimed strikes on Saudi infrastructure (including a refinery claim earlier) and hit Aden airport. Shipping risks around Hormuz and the Red Sea remain elevated even as Gulf flows have recovered toward pre-war levels in spots. UBS and others still see Brent near $110 into year-end on the persistent geopolitical premium, tight inventories, and the fact that this conflict is already deep into its eighth or ninth month.
 The EIA report for the week ended October 23 gave us a mixed picture, but there were still some encouraging signs.
Commercial crude stocks fell 1.9 million barrels to 410.6 million—the fourth weekly decline in a row—leaving supplies about 4% below the five-year average.
Cushing stocks also fell by about 0.6 million barrels. Distillates dropped 1.5 million barrels to 102.8 million, roughly 10% below average, as demand picked back up. Gasoline went the other way, rising a hefty 3.9 million barrels to 209.2 million when a draw had been expected, as demand weakened.
 Still, Midwest gasoline supplies remain tight, keeping refining margins interesting even as hopes for diplomacy take some pressure off crude. With refinery outages to gasoline crack spreads should be strong.
 Overall, petroleum stocks remain lean against the backdrop of the war.
On the charts, both crude benchmarks are still trending higher despite the overnight pullback. Their moving averages remain bullish, RSI is in the mid-60s—elevated, but not extreme—and prices are holding above recent support levels. For WTI, the area to watch is $100–$101. A break below could open the door to the high $90s, while holding that level keeps $102.50–$103.50 and the previous highs within reach. Brent is holding around $113–$114, with resistance ahead at $116–$118.
 As we’ve seen, this market can change direction quickly with each war headline, so volatility is likely to stick around through the midterms and any developments in the Vance talks. Some indicators suggest prices are overbought, which could bring profit-taking. But low distillate stocks, lingering risks around Hormuz, and the possibility of more intense fighting after the election continue to support prices.
Those concerns are unlikely to disappear overnight. Gasoline and distillate refining margins also have support from tight product supplies, especially diesel and heating oil as winter approaches. The crude pullback may limit outright price gains for now, though. Across the broader commodity markets, everyone is watching the same question: does the Iran conflict escalate, or can diplomacy ease tensions? Escalation would lift energy prices, while a credible path toward de-escalation would take some of the risk premium out.
Fox Weather has a spooky forecast for trick-or-treat. Rain and storms will haunt Halloween trick-or-treaters across more than 20 states as systems push into the West, Midwest, and Southeast. Only the Mid-Atlantic and Northeast look clear and dry. For natural gas producers, though, it is even spookier: heating degree days are forecast to act like the Invisible Man—almost nowhere to be seen.
 Mild temperatures mean weak residential and commercial demand just as the market heads into the final stretch of injection season. That sets up today’s EIA natural gas storage report (week ended October 23). Consensus is looking for a build around 75 Bcf, with some estimates closer to the mid-to-high 60s.
A number in that range would keep inventories modestly above the five-year average while the year-over-year deficit remains in place. With heating demand looking invisible into early November, any larger-than-expected injection would reinforce the bearish weather signal for producers. A smaller build could still support prices if the market focuses on the lingering deficit and LNG strength, but the Fox Weather forecast for light HDDs is the headwind the tape has to trade against first.
The weather’s turning frightful and the markets are full of tricks, so make sure you’ve got the treats. Download the Fox Weather app to keep up with every spooky shift in the forecast, from early cold snaps to storms that can send energy prices howling.
And don’t wander the market graveyard alone. Stay tuned to the Fox Business Network for all the latest moves before they sneak up on you.
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Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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