Trading Economics
WTI oil
The MAY26 futures contract for WTI crude oil futures rose above $94/bbl per barrel on Thursday as traders balanced signs that the US and Iran may extend a ceasefire with the ongoing double blockade of the Strait of Hormuz, which continues to disrupt flows. < Here is the "math": Each day the Strait of Hormuz adds at least a week the amount of time it will take to re-balance the global oil market.
> Both sides are reportedly considering a two-week extension to allow more time for negotiations, while traffic through the key waterway linking the Persian Gulf to global markets remains largely paralyzed as the conflict nears its seventh week.
> The US has imposed a blockade to restrict Iranian shipments, while Tehran has kept the strait closed to most other vessels and warned it will halt all regional trade if restrictions persist.
> US Defense Secretary Pete Hegseth said forces remain ready to resume combat if ordered.
> The conflict has caused a major supply shock, lifting inflation pressures and weighing on growth, though prices have eased from earlier peaks despite remaining significantly above pre war levels.
Oil & Gas Prices - April 16
Oil & Gas Prices - April 16
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - April 16
Update from Josef Schachter received April 16, with my comments in blue.
The US is giving off signals that a deal with Iran is progressing and that they may extend the ceasefire if negotiations this weekend in Pakistan show progress. The ceasefire ends next Tuesday but diplomatic efforts may require more time to resolve the ornery technical details. Progress on a framework may be occurring as the sides narrow outcomes needed or wanted. There are a lot of issues to narrow agreement on but the US is signaling that they see a peaceful offramp. Is this for real or just a President Trump negotiating stance?
Iran has problems on its side as the ‘moderates’ need to sway the hawks. < That's an understatement. How can Iran's economy survive when its currency is worthless?
Iran’s economy has weakened as much of its infrastructure is destroyed, its currency is plunging and sanctions continue to push the economy further into recession.
Iran wants sanctions relief, control over the Straits, funds for rebuilding, not to be attacked again, guarantees of an end to Israel attacking Hezbollah and its other proxies, and the right to a nuclear program. This is far from what the US will want to agree to. < Iran is in no position to get any of this.
The US wants:
Iran to give up its nuclear weapons program (now talking 20 year freeze with inspections)
To degrade Iran’s ability to attack its neighbours (mostly achieved)
Iran to give up on its support for global terrorism directly or through their proxies (not achieved).
WTI is trading today at more than US$95/bbl versus US$92.05/bbl last week.
Brent is now trading above WTI again at U$99.75/bbl.
Stock investors have rejoiced and discounted the end of the war with the Dow Jones Industrials now at 48,347.
> We are concerned that the US may not gain enough from this deal to justify the war, and as a result, may use the forces in the area to take Kharg Island to control Iranian oil exports and force them to negotiate more concessions, getting closer to minimum US demands.
> Next week we will see ‘on and off’ commentary regarding the progress of a deal.
> Iran’s leadership may not have a common view, which may muck up progress to end the war. < IMO this is likely and the cease fire will end early in May. If the war does extend through May, the chance of Brent going to $150/bbl goes over 50%.
> President Trump may also lose patience if Iran drags out the negotiations with no meaningful concessions this weekend. He swings from optimism on a deal, to “destroy them back to the stone age” too often. He is planning to visit China in May for meetings with President Xi but if a reasonable deal is not done this may be postponed again.
We are in a new world for this energy super cycle. North American oil stocks lifted meaningfully, but pulled back on Tuesday and Wednesday. When the dust settles there will be an extended and very profitable energy super cycle for investors.
> Use material down days to BUY favorite energy stocks.
> We are not ready to forecast an average price for WTI for 2026 but a number over US$80/b is likely. < My updated forecast/valuation models are using an average WTI price of $81/bbl, assuming that the war ends within the next six weeks; not getting back to $75/bbl until late in the year.
> Our forecast, before the war started, was for a US$70/b average for 2026 with the best prices in Q4/26. Even higher crude prices are expected into the end of the decade.
Bottomline: Josef and I agree that the global oil market was much tighter than most investors realized before the war started (thanks to IEA's lies that it was oversupplied by more than 2 million barrels per day). With or without the war, we see the "Right Price" for WTI being over $80/bbl in 2027, but my 2027 forecasts are based on $75/bbl..
The US is giving off signals that a deal with Iran is progressing and that they may extend the ceasefire if negotiations this weekend in Pakistan show progress. The ceasefire ends next Tuesday but diplomatic efforts may require more time to resolve the ornery technical details. Progress on a framework may be occurring as the sides narrow outcomes needed or wanted. There are a lot of issues to narrow agreement on but the US is signaling that they see a peaceful offramp. Is this for real or just a President Trump negotiating stance?
Iran has problems on its side as the ‘moderates’ need to sway the hawks. < That's an understatement. How can Iran's economy survive when its currency is worthless?
Iran’s economy has weakened as much of its infrastructure is destroyed, its currency is plunging and sanctions continue to push the economy further into recession.
Iran wants sanctions relief, control over the Straits, funds for rebuilding, not to be attacked again, guarantees of an end to Israel attacking Hezbollah and its other proxies, and the right to a nuclear program. This is far from what the US will want to agree to. < Iran is in no position to get any of this.
The US wants:
Iran to give up its nuclear weapons program (now talking 20 year freeze with inspections)
To degrade Iran’s ability to attack its neighbours (mostly achieved)
Iran to give up on its support for global terrorism directly or through their proxies (not achieved).
WTI is trading today at more than US$95/bbl versus US$92.05/bbl last week.
Brent is now trading above WTI again at U$99.75/bbl.
Stock investors have rejoiced and discounted the end of the war with the Dow Jones Industrials now at 48,347.
> We are concerned that the US may not gain enough from this deal to justify the war, and as a result, may use the forces in the area to take Kharg Island to control Iranian oil exports and force them to negotiate more concessions, getting closer to minimum US demands.
> Next week we will see ‘on and off’ commentary regarding the progress of a deal.
> Iran’s leadership may not have a common view, which may muck up progress to end the war. < IMO this is likely and the cease fire will end early in May. If the war does extend through May, the chance of Brent going to $150/bbl goes over 50%.
> President Trump may also lose patience if Iran drags out the negotiations with no meaningful concessions this weekend. He swings from optimism on a deal, to “destroy them back to the stone age” too often. He is planning to visit China in May for meetings with President Xi but if a reasonable deal is not done this may be postponed again.
We are in a new world for this energy super cycle. North American oil stocks lifted meaningfully, but pulled back on Tuesday and Wednesday. When the dust settles there will be an extended and very profitable energy super cycle for investors.
> Use material down days to BUY favorite energy stocks.
> We are not ready to forecast an average price for WTI for 2026 but a number over US$80/b is likely. < My updated forecast/valuation models are using an average WTI price of $81/bbl, assuming that the war ends within the next six weeks; not getting back to $75/bbl until late in the year.
> Our forecast, before the war started, was for a US$70/b average for 2026 with the best prices in Q4/26. Even higher crude prices are expected into the end of the decade.
Bottomline: Josef and I agree that the global oil market was much tighter than most investors realized before the war started (thanks to IEA's lies that it was oversupplied by more than 2 million barrels per day). With or without the war, we see the "Right Price" for WTI being over $80/bbl in 2027, but my 2027 forecasts are based on $75/bbl..
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - April 16
NYMEX Strip for WTI oil is now over $81/bbl through September. IMO there is now zero chance of WTI back below $60/bbl this year.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group