Iran Is Talking. The Energy Report 03/18/2026

Let’s start with Iraq. According to the Iraqi State News Agency and Iraq’s North Oil Company, oil is once again flowing from Iraq’s northern Kirkuk fields through the pipeline to Turkey’s port of Ceyhan, starting at about 250,000 barrels a day. This is happening because the Iraqi government in Baghdad and the Kurdistan Regional Government (KRG) finally reached a deal, letting oil move through the KRG-controlled pipeline. The restart began at the Sarlo pumping station, and there’s a good chance volume could increase soon.

Why does this matter so much right now, especially with the conflict involving Iran? Well, the Iraq-Turkey Pipeline (ITP)—also called the Kirkuk-Yumurtalık line—has long been a major route for shipping Iraqi oil out to global markets. At its peak, it could move up to 1.0 million barrels per day, sending oil from Kirkuk and sometimes Kurdish fields straight to the Mediterranean, totally sidestepping the risky Strait of Hormuz and the southern Gulf ports. The pipeline was shut back in March 2023 due to a dispute between Baghdad and the KRG, plus a big $1.5 billion arbitration ruling against Turkey for allowing Kurdish oil exports without Baghdad’s approval.

With the Iran war causing so much chaos—especially around the Strait of Hormuz—getting this pipeline back online is a huge deal. It means at least some Middle Eastern oil can reach the world market without passing through the Strait, which is now even more dangerous. Exports through this route, mainly Kurdish oil, had only partially restarted after U.S.-brokered talks last year, and federal Kirkuk oil flows had stayed shut down until now. So, Iraq turning the taps back on comes at just the right time, when the world really needs more oil supplies. It also ramps up the pressure on Iran, making it harder for them to use oil as a bargaining chip, since buyers have another reliable source and the fact that they are being defeated military and have to rely on terror tactics which they obviously have 50 years of experience in doing so.

Besides, Fox News reported that Iran’s Supreme National Security Council Secretary Ali Larijani, head of the Revolutionary Guard’s Basij militia Gholamreza Soleimani, and Iran’s Minister of Intelligence Esmaeil Khatib have been killed in strikes, according to Israel. Meanwhile, Tehran has launched more missiles and drones at its Gulf Arab neighbors and Israel.

Yet the oil market is easing and President Trump said that Iran is actively seeking a deal to end the ongoing U.S.-Israel led war: “They want to make a deal. They’re talking to our people. I don’t know if they’re ready yet. They’re taking a pounding.” He added uncertainty about Iran’s current leadership, noting, “All their leaders are dead. We don’t even know who we are dealing with,” likely referencing high-profile assassinations and regime disruptions from U.S. and Israeli operations, including the reported death of Supreme Leader Ali Khamenei early in the conflict and subsequent power shifts and whether Mojtaba Khamenei, the successor and supposed Supreme Leader, is reported to be injured and some believe could even be dead.

The world hates to lose any supply right now but reports say that Libya’s massive El Sharara oil field (capacity ~300–320kbd) has seen reduced output following a pipeline leak at a valve, which triggered a fire/explosion on the crude export line (per NOC and field engineers via Reuters). The National Oil Corporation (NOC) acted quickly: flows are being rerouted via the El Feel pipeline to Mellitah port and the Hamada pipeline to Zawiya storage tanks. This should significantly mitigate losses, with production continuing (no casualties reported). However, engineers indicate a gradual shutdown is underway for assessment and repairs, potentially taking ~2 days. Not great timing for global oil supplies amid tight balances, but Libya’s contingency rerouting shows solid operational resilience. It is expected that will be resolved quickly once the damage is fully evaluated.

The war and Iran’s response is building resolve to not allow this regime to ever threatened the world again. The Wall Street Journal reports that the ongoing war has dramatically shifted the stance of the United Arab Emirates (UAE) and other Persian Gulf states toward Iran’s theocratic regime. Previously, these nations had pursued diplomatic engagement and courted Tehran, but Iran’s retaliatory attacks have transformed it into what they now see as an existential enemy.

The UAE has suffered the most severe impacts, according to the Journal with over 2,000 Iranian drones and missiles launched at the country, more than 80% targeting civilian infrastructure such as oil facilities, refineries, airports, ports, hotels, and data centers. These strikes have killed six civilians and injured 157, according to UAE authorities. Similar attacks have caused civilian casualties across all six Gulf Cooperation Council (GCC) states—despite their advanced US-supplied air defenses mitigating what could have been far worse losses.

Gulf leaders, including UAE Minister Sultan al-Jaber (also CEO of ADNOC), emphasize that this is not a mere military tit-for-tat but an assault on peaceful nations committed to diplomacy. Jaber insists any lasting political settlement must comprehensively neutralize Iran’s threats: its nuclear program, ballistic missile arsenal, and proxy network (including the Houthis in Yemen, Hezbollah in Lebanon, and militias in Iraq). That is what the Trump administration has been saying all along

Iran’s pre-war negotiations with the US focused only on its nuclear program, explicitly rejecting limits on missiles or proxies. Tehran now demands reparations and ironclad security guarantees for any ceasefire, while claiming its strikes target only US bases and interests—a claim that has enraged Gulf states, given the direct hits on their civilian and economic targets.

The Iranian disruption of the Strait of Hormuz—through which 35% of global crude oil and 20% of liquefied natural gas once flowed—has escalated the crisis into global economic warfare, according to Jaber. This blockade drives up inflation, slows economies worldwide, and disproportionately harms low-income nations by raising food and energy costs.

Gulf officials and analysts argue that Iran’s indiscriminate barrages and willingness to target neighbors have crossed every red line. They now seek an outcome where the regime is severely weakened—”neutered” or “defanged”—to prevent future threats. Leaving Iran in control of the Strait post-war would allow it to hold the region hostage indefinitely, as one Qatari professor warned: any future pressure on Tehran could trigger renewed attacks on Gulf states, since the “taboo” has been broken.

So I guess what he is saying is that the Strait of America—or Trump’s Strait—has a nice ring to it. Maybe we should charge a special strait passage tax to all the NATO countries that failed to come to our aid as we removed this terrorist regime.

Diesel concerns persist. The diesel crack spread is increasing again, following reports that the Trump administration has lifted additional sanctions on Venezuela, which could result in the release of more heavy oil. John Kemp Energy points out that Global prices for diesel and other heavier oil products have risen even faster than those for crude as the war between the United States and Iran interrupts exports from the world’s most important area for medium-density crude. Recent reports indicate the Trump administration has continued easing (or “lifting additional”) sanctions on Venezuela’s oil sector in March 2026, including expanded waivers issued around March 13 to facilitate investment in energy/petrochemicals, oil flows, and even fertilizer exports. This builds on earlier moves starting in January 2026 (post-Maduro capture), such as general licenses allowing U.S. companies to buy, sell, transport, refine, and export Venezuelan-origin crude—much of which is heavy sour grades ideal for diesel production.

Natural gas prices are holding fairly steady in this shoulder-season transition. Henry Hub spot is sitting around $3.10–$3.25/MMBtu lately (with the most recent prints showing about $3.25 on March 9 before any fresh daily moves), while April NYMEX futures are trading in the low-to-mid $3 range—think $2.95–$3.10 or so, with some downward pressure in overnight/early sessions but still clinging above $3 overall. We’ve seen a pretty tight range since mid-February, mostly $2.89–$3.30, a modest bounce from late-winter lows even as heating demand starts fading.

On storage, the latest EIA print (for the week ending March 6) showed a lighter-than-normal 38 Bcf draw, leaving inventories at 1,848 Bcf—just 17 Bcf below the 5-year average and still 141 Bcf above last year. That narrowed the deficit nicely. The next report (week ending March 13, due out soon) is widely expected to mark the first injection of 2026, around 42 Bcf or so, which could flip us into a surplus versus the 5-year norm and add some bearish vibes if it comes in as forecasted.

Fundamentals are mixed but leaning soft domestically: U.S. dry production is rock-steady near 110 Bcf/d with little rig action changing things, so ample supply keeps a lid on big upside. Heating demand is dropping fast with milder spring patterns, though power burn and solid LNG exports (near capacity) provide a bit of a floor. Geopolitically, the ongoing Iran conflict and Hormuz issues are lending some support through crude sympathy (oil around $95/bbl) and global LNG worries, but the U.S. market is more focused on that domestic oversupply feel.

Weather-wise, Fox Weather outlooks point to a classic March shift—early warmth spikes (15–25°F above average in the South, Mid-Atlantic, and Northeast) have eased into more unsettled conditions, with some cooler pockets mid-month and storm risks from Gulf moisture and jet stream wobbles. But no big late-season cold blasts look likely; overall mild shoulder-season vibes dominate. That’s pretty bearish for natural gas near-term, as it crushes remaining residential/commercial heating needs and speeds us toward full injection mode. Without a surprise cold snap (models aren’t showing it), demand should keep eroding, potentially pushing prices toward sub-$3 if those injections pile up quickly.

Upside could come from stronger exports or any global supply escalations, but right now weather’s the main near-term headwind. Market feels range-bound—watch the upcoming storage release, next 6–10 day forecasts, and LNG flow trends for any real shifts,