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Phil Flynn

Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665

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Thank you, President Trump. The Energy Report 09/10/2026

By On September 10, 2026 - 9:35 AM · In Market Commentaries, Phil Flynn Energy Report
Before we get started, I wanted to say thank you for the very kind words on Truth Social about my interview yesterday on Fox & Friends with Ainsley Earhardt. I was humbled. Coming from a man I respect, it meant a great deal. I will continue to pray for you and for our country. God bless you, President Trump, and God bless America.
We also pray that retail gasoline and diesel are getting ready to top.
After the blowout run in the diesel crack — U.S. margins punched through $100 a barrel in August and tagged an all-time high above $106–$108 last week — the market is screaming something the crude headlines keep missing.
Like I said on the show yesterday: while the cameras stay locked on Iran and the Strait of Hormuz, a big piece of the problem is not oil itself. It is refining capacity. That shortage got exposed by Ukrainian strikes on Russian plants and the disruptions through Hormuz. Russia used to be a major diesel exporter. Now it has banned diesel exports, and plants keep getting hit — including Rosneft’s Ryazan refinery, where sources say key units halted after the September 6 drone strike.
This also goes back to something we have been talking about for years: the war on fossil fuels. Refineries built to max out distillate around the globe were shut down and never replaced. Energy Secretary Chris Wright said it straight: refining is a bigger problem than oil now. On Face the Nation he noted that 17 years of policies attacking hydrocarbons closed plants, and that global refining capacity — not just crude — is why gasoline and diesel stay high even when crude is not at the same extreme. That is why the crack is still in record territory. The product market is the bottleneck until more capacity comes back.
Iran is still talking tough even as the economy is being gutted and the attacks keep failing. A senior official told Bloomberg Tehran is ready for a more intense war with the United States if required. The line out of the capital this morning is that the “era of proportionate responses” is over: every U.S. strike will be met with something faster, heavier, and more painful. They say they have rebuilt the missile stockpile since April, will not blink at the naval blockade, and are prepared to escalate if Washington keeps hitting tankers and infrastructure. Talk is cheap when your oil is trapped.
The United States just sank five more Iranian crude carriers after the IRGC took another shot at a Navy warship. Tehran answered by claiming it hit ten ships around Hormuz and lobbed missiles at a Jordan base used by American forces. Markets heard the noise. Brent punched back through $100 and WTI is hanging around $96. That is the risk premium talking, not Iranian strength.
Look at the scoreboard, not the slogans. Iranian loadings inside the Gulf have collapsed. Trackers have August flows down 80 percent from a year ago, and some estimates put barrels actually clearing the U.S. blockade at zero. The floating stockpile west of the line has been drawn down from roughly 90 million barrels in July to about 29 million. At the current drip that stash runs dry by mid-October. After that the checks from China get a lot smaller. Meanwhile the rial is getting hammered, official inflation is running above 80 percent, and the IMF is looking at a contraction of more than 5 percent this year. Oil used to fund a third of the budget and a big chunk of the IRGC. That tap is closing. You do not fund a “more intense war” with a melting currency and a tanker fleet on fire.
Hormuz still matters. Before the war it moved close to a fifth of the world’s oil. Flows have been a fraction of that for months. Every time Tehran tries to turn the strait into a weapon, insurance rates spike, ships sit, and the rest of the Gulf finds work-arounds. The blockade is doing what years of paper sanctions never quite did: it is starving the regime of hard currency in real time.
President Trump says this does not end until after the midterms. Secretary Wright is more optimistic on gasoline in the weeks ahead if U.S. refining keeps ramping. Traders will split the difference until they see whether the next Iranian “prohibited zone” actually stops tankers or just produces more video of burning hulls.
Bluster from Tehran is not a surprise. A regime that sees the war as existential will keep shooting even while the economy is asphyxiated. That keeps a floor under crude. It does not give Iran leverage. Every tanker they lose and every barrel that never leaves the Gulf is another reminder that talking tough is easier than paying the bills. Watch the floating inventory, watch the next U.S. response, and watch whether China keeps buying the last barrels sitting outside the blockade. That is the real story. The press conference in Tehran is noise.
Bloomberg is waving the red flag this morning, and they are not wrong. Global tanker freight is ripping to record highs with no timeout in sight. That is not a shipping story. That is the oil market still adjusting to Hormuz supply-chain disruptions, and the first work-arounds are more expensive and more complicated. Supertankers on the benchmark Middle East-to-China run are now earning nearly $800,000 a day — a record. Charterers on the U.S. Gulf-to-Asia VLCC route are throwing around a record lump-sum of $29.5 million. Do the math and you are looking at something close to $15 a barrel before war-risk premiums or the bill for sitting around waiting for the next delay. Of course that also means oil could drop $15 a barrel quickly if the Iranian regime falls — which could happen as the economy implodes and they cannot feed or pay the soldiers.
The American Petroleum Institute showed a much-needed increase in diesel supply after the blowout in the diesel crack and a dip in the gasoline crack.
API data for the week ending September 4 showed U.S. gasoline stocks falling 1.9 million barrels after no change the prior week. Distillate inventories rose 2 million barrels after a 300,000-barrel draw the week before. Cushing stocks fell 300,000 barrels after a 200,000-barrel build previously. Crude oil inventories declined 300,000 barrels versus a forecast draw of 1.3 million barrels and a previous-week draw of 2.6 million barrels.
That distillate build is the number that matters. Diesel cracks had gone parabolic. A 2-million-barrel build is the first real relief valve we have seen. It does not fix historically lean stocks — distillates were still running about 14 percent below the five-year average heading into this week — but it takes some of the panic premium out of the crack.
Gasoline went the other way. A 1.9-million-barrel draw keeps the gasoline complex tight. Product stocks were already well below seasonal norms. The gasoline crack eased even as crude firmed — classic late-summer handoff: gasoline demand starts to fade while distillate takes the baton. The 3-2-1 crack has been holding in the mid-$60s per barrel; underneath that headline number, diesel is still doing almost all the heavy lifting and gasoline is giving some of it back.
Crude itself was a miss versus the 1.3-million-barrel draw the street wanted. A 300,000-barrel decline after a 2.6-million-barrel draw the week before is not bullish on its face. Cushing also slipped 300,000 barrels. Commercial crude has been grinding lower for months; SPR releases have been papering over some of that tightness as record U.S. production keeps refinery runs and exports at or near record highs.
WTI has been trading in the $97 handle and flirting with the $100 conversation as geopolitical risk stays in the tape. The smaller-than-expected crude draw takes a little heat off the prompt contract, but product tightness — especially diesel — is still driving the complex more than the crude print. Watch the official EIA numbers today. If they confirm a solid distillate build and another gasoline draw, the diesel crack should continue to come in off the highs while gasoline stays supported. Refiners who can make diesel are still printing money. Consumers will be paying nearly $6 diesel at the pump.
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Natural gas is pulling back again as the weather tailwind fades. The October NYMEX contract was trading near $2.79 this morning after settling at $2.822 Wednesday, well off recent tests of the $3.00 psychological level. EBW Analytics noted that the front month poked above $3.00/MMBtu intraday in three of the past four sessions — including a $3.014 high on September 8 and a $3.026 high on September 3 — but could not hold a close above that threshold. After this latest slide, immediate-term technicals lean bearish.
Fox Weather’s outlook is the main reason the bid is softening. The National Hurricane Center says tropical cyclone formation is not expected in the Atlantic, Caribbean, or Gulf over the next seven days. Fox Weather’s Bryan Norcross and other forecasters point to record wind shear, a strong El Niño, and Saharan dust keeping the basin unusually quiet at the climatological peak of the season — so quiet that 2026 is on track to break the satellite-era record for the latest first Atlantic hurricane. Heat is also waning as September progresses. Download the Fox Weather app for the latest maps and model runs.
The near-term fundamental picture is not one-sided. September weather has still been searing in key demand regions, LNG feedgas remains stout, and the year-over-year storage deficit is still expected to widen from roughly 50 Bcf toward 135 Bcf across the next trio of EIA weekly reports. The latest official print, for the week ended August 28, showed a 30 Bcf injection that lifted working gas to 3,214 Bcf.
Supply, however, looks more durable. U.S. dry production has been setting monthly and daily records, Canadian storage is ample, and pipeline imports have been rising off that surplus. As cooling demand fades into October, that year-over-year deficit is likely to start contracting. EIA’s latest Short-Term Energy Outlook already has inventories finishing October near 3,969 Bcf — about 5 percent above the five-year average and slightly above last year.
That bearish structural setup into winter may cap near-term upside. Spreads are compressing, and the winter contracts have been hard to lift even when the prompt month flirted with $3.00. Weather can still surprise, and one Gulf storm would change the tape overnight — but right now the Atlantic is calm, production is heavy, and the market is treating $3.00 as a ceiling rather than a floor.
Download the Fox Weather app and stay tuned to the Fox Business Network. Open your account by calling 888-264-5665 or email pflynn@pricegroup.com.

Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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