Why Bomb Barrels? The Energy Report 06/16/2025

Even though Israel has attacked Iran relentlessly and Iran has attacked back, at the end of the day the key thing to remember is that so far, the Iranian oil barrels continued to flow. Israeli Prime Minister Benjamin wanted to remind folks that this war is not against the Iranian people but against the regime. He also should remind you that this is not a war against Iran’s oil capabilities either but a war against Iran’s nuclear ambitions. Israeli Prime Minister Benjamin Netanyahu stated on Fox News that regime change in Iran may result from Israel’s military actions against the country. Netanyahu emphasized that Israel would take all necessary measures to address the “existential threat” posed by Tehran.

It seems one of the targets that Israel and Iran both want to avoid is any type of oil infrastructure. That could have a big impact on prices and could derail the global economy. It is in interest right now in both countries not to attack oil infrastructure. For Iran it’s their only source of revenue and if they survive, they will have to have that oil revenue to rebuild their country. And even if there is a regime change in Iran, Israel and the United States would be hopeful that their oil infrastructure would be intact so they could rebuild.

Israel does not want to attack the oil infrastructure because it could raise the ire of the Trump Administration that wants to keep oil prices low. Israel understands that the global oil price shock may not be ideal. This is why oil prices, after initially spiking, have pulled back overnight.

It seems like Iran is consistently being backed into a corner as they are not the most popular country on the planet they are receiving little support even from many Arab countries. Somewhat of a surprise is the support they’re getting from Syria. President Trump was criticized for reaching out to Syria’s President Ahmed al-Sharaa and lifting sanctions on Syria to try to normalize relations. That gesture is paying off. It has been reported that Syria’s President Ahmed al-Sharaa has announced that Syrian airspace is now open to intercept Iranian drones and missiles. A win for Trump Diplomacy.

Israeli reports state that one-third of Iran’s missile launchers have been neutralized. Despite this, the IAEA notes that Iran’s Natanz and Fordow enrichment sites remain operational. Israel claims air superiority over Iran and suggests further attacks on nuclear targets, including program headquarters in multistory buildings, are likely.

So far this is the Energy Infrastructure toll from the conflict Natural Gas Facilities:  South Pars Gas Field (Bushehr Province)   Description: The South Pars field, shared with Qatar (where it is called the North Field), is the world’s largest natural gas field and accounts for two-thirds of Iran’s natural gas production, primarily for domestic consumption.

Attack Details: On June 14, 2025, Israeli drones struck the Phase 14 natural gas processing facility in the South Pars field, located in Kangan, Bushehr province. The attack caused a fire and temporarily halted production of approximately 12 million cubic meters of gas per day from an offshore production platform.

Impact: The strike disrupted a significant portion of Iran’s domestic gas supply, exacerbating existing energy shortages. The

Iranian Petroleum Ministry confirmed the attack, and emergency crews worked to extinguish the fire. 

2.  Fajr Jam Gas Refinery (Bushehr Province): Description: One of Iran’s largest gas processing facilities, it processes fuel from the South Pars field. •  Attack Details: On June 14, 2025, Israeli strikes targeted the Fajr Jam gas plant, causing a fire. The Iranian Petroleum Ministry confirmed the facility was hit. Impact: The attack disrupted gas processing, further straining Iran’s ability to meet domestic energy demands.

Oil Facilities

1. Shahran Fuel and Gas Depot (Tehran): Description: Located northwest of central Tehran, this is one of Tehran’s largest fuel storage and distribution hubs, with a capacity to hold three days’ worth of the capital’s fuel needs (approximately 8 million liters of gasoline daily).   Attack Details: On June 14, 2025, Israeli strikes hit the Shahran depot, causing major fires. Iranian state media reported that emergency crews struggled to contain the blaze.  Impact: The attack raised concerns about potential fuel shortages in Tehran, with residents reporting long lines at gas stations.

Natural Gas Facilities: 1. South Pars Gas Field (Bushehr Province): Description: The South Pars field, shared with Qatar (where it is called the North Field), is the world’s largest natural gas field and accounts for two-thirds of Iran’s natural gas production, primarily for domestic consumption. Attack Details: On June 14, 2025, Israeli drones struck the Phase 14 natural gas processing facility in the South Pars field, located in Kangan, Bushehr province. The attack caused a fire and temporarily halted production of approximately 12 million cubic meters of gas per day from an offshore production platform. •  Impact: The strike disrupted a significant portion of Iran’s domestic gas supply, exacerbating existing energy shortages. The Iranian Petroleum Ministry confirmed the attack, and emergency crews worked to extinguish the fire.

2.  Fajr Jam Gas Refinery (Bushehr Province):   Description: One of Iran’s largest gas processing facilities, it processes fuel from the South Pars field.   Attack Details: On June 14, 2025, Israeli strikes targeted the Fajr Jam gas plant, causing a fire. The Iranian Petroleum Ministry confirmed the facility was hit. Impact: The attack disrupted gas processing, further straining Iran’s ability to meet domestic energy demands.

Despite various reports of damage, it appears that Iran is unlikely to have the capability to close the Strait of Hormuz. Additionally, oil exports from Kharg Island, which account for about 90% of Iran’s exports, seem to be continuing as usual, despite the ongoing conflict. 

And what we’re seeing after a big pop in the overnight as oil has been working its way lower.

The worst-case supply risks over the weekend didn’t materialize. While we will adjust risk premiums based on headlines, predictions of oil spiking to $90 or $100 a barrel seem unlikely at this point. We’re down almost $5 from the high after the gap opening on Sunday night and i still think there’s going to be some great trade swings here over the hours and we’re not out of the woods yet at.

Now the one market that seems to really be concerned more than any market is the diesel market. I think what’s happened is that refiners are going to focus on gasoline production at this time and any disruption to supply is going to leave us short of diesel. It continues to be below average when it comes to oil inventory you know there’s definitely a lot of trucks out there that’s going to need diesel but they’re the ones that are going to be paying the brunt of the price spike in the short term.

So far, we’ve seen gasoline prices perk up just a little bit during, According to AAA the current national average is at $3.14 a gallon that’s roughly about two cents from a week ago. Diesel prices are currently 352.4 cents a gallon and that’s up from $3.494 cents from a week ago.  

European natural gas prices have surged due to recent attacks. During today’s auction, prices exceeded $455 per 1,000 cubic meters. On June 16, July futures on the TTF index in the Netherlands reached $460, a 1.8% increase. That has also filtered down to the United States market as natural gas here looks like they’re bottoming and also getting some help from warmer temperatures.

Fox Weather reported that flash flooding in West Virginia claimed five lives, including a three-year-old child. Several people remain missing. Ohio County saw up to four inches of rain within an hour, and a state of emergency was declared in Marion

County after an apartment building partially collapsed in Fairmont.

EBW Analytics said that over the weekend, weather-driven demand added 4 CDDs for the balance of June. Production and LNG readings also moved higher. Growing macro allocation to the energy sector with the Mideast war is contributing natural gas upside since Thursday.  

With the increased heat and the potential for more electricity demand from artificial intelligence and data centers we would expect that electricity demand will shatter records in June and July. This should provide some long-term support for natural gas futures as well.

So make sure that you download the Fox Weather app to keep up with the latest breaking news on weather developments you should also stay tuned to the Fox Business Network because they are the only network in America that is truly invested in you.

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