A Gentle Nudge. The Energy Report 06/22/2026

Oil prices are reversing lower this morning after President Trump gave a gentle nudge to Iranian negotiators to get the peace talks back on track. President  Trump told Trey Yingst at Fox News that “If Iran doesn’t reach a deal, the U.S. could “take over” the strait and “collect tolls” as the “guardian angel” of the region. He said he told Iranian officials they “won’t even make it back to your f**king country” if they close it, and that the U.S. might resume bombing or hit Iran “very hard again.”

He sweetly reminded them that “”You close it and you won’t have a country”  in his own very charming way,

Whatever he said it seemed to work as oil price that initially surged higher pulled back and gasoline and diesel crack spread rose as the market is expected strong demand in a post war word and problems in Russia with Ukrainian attacked refineries.

Even Iran reported “major progress” in all-night talks with the US, pushing for a full peace deal within two months. Bloomberg reported that technical negotiations in Switzerland’s Bürgenstock followed last week’s interim agreement, which extended the ceasefire and reopened the Strait of Hormuz.

Iranian FM Araghchi credited Qatari and Pakistani mediators for easing Lebanon tensions and delivering early wins: US sanctions waivers on Iranian oil and petrochemical exports, unfrozen assets in places like Qatar, and the lifting of the blockade.

“Tireless Pakistani and Qatari mediation has delivered major progress to end Lebanon War,” Araghchi posted. “Oil and petrochem exports are waived, blockade lifted, some frozen assets released, and major reconstruction & development plan launched for Iran.” This de-escalation is putting fresh downward pressure on oil. Watch for increased Iranian crude flows and a potential peace dividend weighing on prices.

And on the ground oil was moving this weekend  through the Strait of Hormuz. Confirmed crossings through the monitored Strait of Hormuz zone rose sharply over June 19–21, with 71 total transits recorded. This marks a notable pickup following the U.S.-Iran interim memorandum of understanding signed around June 17, which aims to reopen the critical chokepoint after months of severe disruption since late February 2026.  Of course pre-crisis norms hovered around 100–140 vessels daily, carrying roughly 20% of global oil trade.

While recent traffic remains well below that level but represents a clear improvement over the near-shutdown period, with early commercial transits (including some Saudi-owned tankers) using safer coastal routes while de-mining and full normalization continue.

While the  Strait of Hormuz isn’t fully “back to normal” yet, but these 71 transits signal the ice is breaking. Expect gradual normalization to ease tight supply dynamics, but any hiccups in implementation or regional flare-ups (Lebanon, etc.) could quickly reverse the momentum. Traders should stay nimble on COT positioning and EIA/API inventory flows.

On the Russian Front reports that Russia is seeing gas lines in the country because Ukraine drone attacks on Russian refineries. This means the war is hitting closer to home for average Russians and should put pressure on Russian President Putting to seek  a deal.

 Russian fuel markets are under mounting strain from sustained Ukrainian long-range drone strikes on refineries, storage facilities, and related infrastructure. This has triggered spreading shortages, long queues at gas stations, purchase limits, and rising prices across dozens of regions—including major hubs like Moscow and St. Petersburg.

Ukrainian attacks have taken 20-30%+ of Russia’s refining capacity offline at times. In May-June 2026 alone, strikes targeted major facilities (e.g., Moscow refinery producing ~1/3 of capital region fuel, Nizhnekamsk, and others), causing full/partial shutdowns and reduced output of gasoline, diesel, and jet fuel.

Shortages reported in 50+ regions. Restrictions include caps (e.g., 20-50 liters per customer at Tatneft stations), dry pumps, and bans on sales into canisters to prevent hoarding. Crimea and southern areas face acute issues, with some stations halting civilian sales entirely.

Drivers report waits of hours (up to 10 in some spots).  Sort of bring back the good old days of the Soviet Union for some. Social media videos show frustration in Moscow-St. Petersburg corridors and beyond. Prices have climbed steadily (wholesale diesel +43% YTD in some metrics; retail gasoline up ~4% recently).

 Reports say that Russia has responded with export bans/suspensions (gasoline through July), planned sea imports, and quality rule tweaks—but analysts warn summer peaks and ongoing strikes could worsen the squeeze into 2027.

These domestic Russian headaches contrast with global oil dynamics eased by US-Iran peace progress (Strait reopening hopes). Reduced Russian exports/throughput adds some counter-pressure on supply, but overall, the “peace dividend” from Hormuz has dominated price swings downward. Watch knock-on effects in crack spreads, which we are seeing here today.

The July natural gas contract tested as low as $3.017 last week before springing higher ahead of the weekend. Strong LNG feedgas demand, a bullish EIA storage report, and some weather vendors indicating chances for a hotter start to July are offering opportunities for upside into the July final settlement.

Front-month futures have shown resilience, recently trading in the $3.20–$3.34 range amid short covering and technical buying after dipping toward key support. This comes as the market digests ample supply but eyes growing power demand from cooling needs and long-term LNG/export strength.

Fundamentals in Focus:

While monthly rollover volatility may continue to impact pricing in the near term, the bigger fundamental story remains U.S. production hitting a two-month high over the weekend. Output is on track for record levels in 2026, with dry gas production running nearly 4% higher year-to-date through early June compared to last year, according to preliminary data. Monthly highs have been set consistently so far this year.

Unless summer weather trends turn steeply hotter, this returning supply is likely to bias medium-term pricing lower. Credit to EBW Analytics for highlighting the production strength and its potential to weigh on prices if demand doesn’t accelerate meaningfully. EIA forecasts show marketed production growing by about 3.3% in 2026, supporting robust storage builds and keeping the market well-supplied overall.

On the demand side, LNG feedgas has stabilized post-maintenance at elevated levels (around 16+ Bcf/d recently), well above year-ago figures, providing a solid floor. Power generation demand is also picking up with summer cooling, and longer-term tailwinds from AI data centers and industrial use add bullish undertones.

The latest EIA storage report showed a build of +73 Bcf for the week ending June 12, in line with the 5-year average but slightly below some expectations. Stocks sit above the five-year average, offering a comfortable cushion heading into peak summer demand.

According to Fox Weather and broader forecasts, expect a hot summer ahead with above-normal temperatures likely across much of the U.S., particularly building in July and August. Heat ridges could drive highs into the 90s+ in the Central and Eastern U.S., boosting air conditioning demand and power burn for natural gas. Early July may see some hotter-than-normal stretches that support prices, though scattered thunderstorms and variable patterns could moderate national demand at times. Keep an eye on heat wave intensity—sustained above-average temps would be the key catalyst to counterbalance strong production.

Watch for continued technical positioning around the July contract, any updates on LNG flows, and evolving weather models. A hotter July forecast could spark further short-term rallies, but the supply backdrop suggests any upside may be capped unless demand surprises to the upside. Traders should monitor rollover dynamics closely as we transition deeper into summer

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