Toll Or No Toll That’s The Question. The Energy Report 07/14/2026

I guess being the Guardian of the Strait of Hormuz doesn’t pay as well as you thought it might.  The New York Post reports that President Trump ditched his proposed 20% Strait of Hormuz toll Tuesday after Gulf allies agreed to replace it with billions in US investments — as Washington and Tehran traded large-scale strikes across the region. “I put it out yesterday, I thought it was good. [But] I was called by different people, different countries — kings and emirs, and all of the people that we all know and we all love — and they’ve been, frankly, they’ve been very strong partners,” Trump told reporters in the Oval Office.  “And they said ‘We’d love to do it a different way, we’d love to invest in the United States with billions and billions of dollars,’” he added.
Oil prices are back up after Iran somehow can’t get the message that attacking ships is not a good way to win favor with your neighbors. President Trump hit them hard for the fifth straight day as U.S. Central Command forces began launching a wave of strikes against Iran. The strikes are designed to further degrade military capabilities Iranian forces have used to attack commercial shipping in the Strait of Hormuz.
Trump has been crystal clear on the toll issue: the U.S. will act as the “Guardian of the Hormuz Strait” and ensure safe passage without Iranian interference or fees. He has warned against any Iranian attempts to impose tolls, insurance charges, or other costs on shipping, calling it unacceptable and a potential deal-breaker.
At the same time, Trump noted that Iran has asked to resume talks, and the U.S. has agreed—but with the ceasefire firmly over. Reports indicate Iran is signaling interest in returning to negotiations amid the pressure, though Tehran has pushed back on some claims and demanded commitments on issues like sanctions relief and assets.
Of course, the attacks have slowed traffic drastically in the Strait of Hormuz and that and Ukraine attacks on Russian refiners that has caused a huge spike in diesel crack spreads. Reuters is reporting that Russia’s Salavat petrochemical complex—one of their big ones out in the Urals—got hit hard by a Ukrainian drone strike on Tuesday and has now shut down operations.
According to industry sources, both primary crude distillation units took damage: CDU-6 at about 17,140 tons per day and CDU-4 at 11,430 tons per day. Some secondary units and other equipment got dinged up too. That’s a meaningful hit—this plant handled roughly 2.7% of Russia’s total refining throughput last year, cranking out millions of tons of diesel, gasoline, fuel oil, and other products.
Now, the local governor is sounding optimistic, saying they could get back to normal output in just a few days. But the sources on the ground are painting a different picture—repairs on those big primary units could drag on for weeks or even months. This adds another layer of supply risk to an already tight global refining picture amid the ongoing Ukraine conflict. We’ll be watching how quickly they actually bring this capacity back online, because any prolonged outage could give a little support to product cracks and refined fuel prices.
This comes as OIL price reports that After striking 116 vessels linked to Russia’s shadow fleet in the Sea of Azov in recent weeks, Ukraine’s military is turning its sights on ships in the Black Sea, hitting in drone attacks as many as 20 vessels overnight on Wednesday. Ukrainian forces struck 17 Russia-linked oil tankers, 2 gas carriers, and one tugboat early on July 15, drone unit commander Robert Brovdi said on Telegram today, adding that an official report with video evidence would follow later in the day.
Today we get the PPI after a big drop in the CPI, but once again markets may focus on gas prices as the headline driver of inflation relief. According to AAA, national average gas prices continue to climb with regular now at $3.89 per gallon, up from yesterday’s $3.86, last week’s $3.80, but still well below the month-ago level of $4.07 and higher than year-ago’s $3.15. Mid-grade sits at $4.40, premium at $4.78, diesel at $4.94, and E85 at $2.99, all showing similar short-term gains but meaningful relief versus recent peaks. Lower pump prices are providing welcome support to consumers even as traders watch today’s producer price data for the next inflation signal.
Reuters report that China’s fuel oil demand is in for a long, slow recovery after imports cratered to a record monthly low. Refiners slashed runs to a 10-year low in June amid weak domestic demand and those export curbs tied to the U.S.-Iran conflict, opting instead for much cheaper crude. As one Chinese refiner put it, regular crude is trading at ICE levels of minus $5 to minus $8 a barrel — fuel oil just can’t compete right now.
Imports plunged to about 559,000 metric tons in May (115k bpd), with June ticking up modestly to 700-800k tons per Vortexa data, but still way below the 1.8-2.29 million ton averages we’ve seen recently. A lot of what’s coming in now is just for ship refueling, not refinery feedstock. Top suppliers remain Russia, Malaysia, and Singapore, though Russian exports are getting hit by Ukraine’s attacks on their infrastructure.
The good news? Asian HSFO margins improved this week — 380-cst discount to Brent narrowed below $2/bbl and the Dubai crack moved to a premium above $3.25. But overall, this lackluster Chinese appetite should keep a lid on fuel oil prices even with the latest Middle East supply jitters through the Strait of Hormuz. Beijing just eased some refined product export curbs, but it’s too early to call for a sharp rebound in runs or feedstock buying.  So watch China closely — their pullback is a key headwind for fuel oil in this volatile environment.
Wow, is natural gas bottoming? I’m afraid to say it, but the daily chart sure looks like it as Freeport LNG may be coming out of maintenance soon.
Not only that, but Fox Weather is also still reporting on the heat dome, with dangerous heat advisories across the central and southern Plains through the Northeast and New England, putting nearly 80 million at risk. Record-breaking temperatures and high humidity are driving strong air conditioning demand, with heat index values pushing into the triple digits in places like Texas and the Midwest.
August nat gas futures have faced pressure from the Freeport LNG maintenance, which kicked off around July 10 and is expected to run through late August, reducing feedgas demand and contributing to recent storage builds. This helped push prices to multi-week lows recently, with a big 61 Bcf injection reported for the week ended July 3 (well above expectations).
However, the technical setup is showing signs of stabilization, and the combination of lingering heat and the eventual return of Freeport capacity could provide support. Production remains robust (Lower 48 output around 109-110 Bcfd recently), but sustained above-normal temperatures through mid-to-late July and into August are expected to keep power burn elevated.
LNG exports overall have held strong near 17-18 Bcfd even with Freeport offline, and other facilities like Golden Pass are ramping. The market is watching for any extension of the heat pattern, which could That’s tighten balances and force short covering (managed money has been heavily net short).
While ample storage and maintenance have capped upside, the daily chart is testing support, Freeport’s return by late August looms as a bullish catalyst for demand recovery, and Fox Weather’s heat dome coverage underscores ongoing cooling needs. We could see a bottom form here if heat verifies and injections slow. Watch August nat gas closely around these levels for a potential technical reversal.
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Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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