Oil prices are on the rise after what one might call a memorandum of misunderstanding. Earlier yesterday oil prices were selling off hard in part due to a ZeroHedge report that ‘mediators say that the US -Iran ‘close” to resurrection the failed memorandum of understanding. Yet what it really should be called is the memorandum of misunderstanding because Iran can’t seem to understand that the understanding was that you should not attack unarmed commercial vessels.
Now apparently after that story it appears that Iran can’t understand that they should not try sneak attacks on US troops. Just hours after the so-called progress on talks Iran launched a sneak attack on U.S. troops, shattering the fragile “quiet for quiet” pause and sending oil markets into a sharp risk-on scramble. Late Braking Trump says that in Response they are going to hit Iran hard.
and refined-product crack spreads surged as traders priced in renewed threats to Middle East supply and shipping through the Strait of Hormuz.
jumped more than 5% toward the $88–$88.35 area (up roughly $4+ on the day), while WTI climbed about 4–5% into the low-to-mid $83s.
The sudden shift in market sentiment has traders focused on the charts: both Brent and WTI left clear gaps on the Sunday night gap-down open after the earlier de-escalation hopes drove prices sharply lower (oil had plunged toward the high $70s / low $80s zone in the prior sessions). Those gaps now look like magnets — the change in tone makes a fill of the Sunday night downside gaps the high-probability path as bulls regain control. In fact so far during this conflict all gaps prior to this has been filled. Of course, the question is when
Crack spreads exploded higher alongside the crude rally. The benchmark 3-2-1 crack has been trading near record or near-record levels in the mid-to-high $60s per barrel in recent sessions (earlier prints near $64–$69+), with recently around the $50s–$59 area and diesel/ULSD cracks pushing extreme territory (prior prints above $90 in places). Product markets are screaming tight amid the geopolitical flare-up, amplifying the upside for refiners even as crude itself rebounds hard. We have been telling clients to focus on these spreads.
This comes as Goldman Sachs maintains a more measured base-case outlook that still points lower over time — roughly $80 Brent in Q4 2026 and around $75 in 2027 — assuming geopolitical tensions gradually ease and flows normalize. Their upside scenario is starkly different: prolonged Strait of Hormuz disruption could push Brent above $120 next quarter and average near $100 through 2027. Downside risks they flag include faster supply recovery plus softer demand, potentially taking prices into the low $60s later on.
Other houses have also swung between high-price and lower-price camps. JPMorgan has recently projected Brent averaging around $86 in Q3, $80 in Q4, and exiting the year near $78, with a longer-term path that could trend toward the $60s in 2027 if a surplus reappears.
Some earlier calls from the peak of the conflict (and still-circulating bullish scenarios) kept $100+ prints in play for periods of severe disruption, while more bearish voices such as Citi have talked of a slide toward the $60–65 zone by year-end if peace holds and inventories rebuild. Barclays and others have at times held firmer on elevated levels, arguing the physical damage and risk premium may prove stickier than the market hopes.
While those high-price arguments look compelling given the latest sneak attack and the fresh risk premium being layered back into the market, the futures curve continues to send a calmer outlook.
Oil has spent much of this conflict in steep backwardation — near-term contracts trading at a substantial premium to deferred ones — which is the market’s way of saying “tight right now, but we expect eventual normalization.”
That structure has repeatedly priced in a path back toward the mid-to-high $70s (or lower) further out the curve once (or if) supply routes stabilize. In other words, the curve is still betting that today’s geopolitical spike is more temporary than permanent, even as every new escalation forces the front of the curve higher and keeps the gap-fill trade alive for Brent and WTI.
The bulls have the near-term tape and the crack spreads on their side after the attack. The curve, and several big-bank base cases, are still looking past the fireworks toward eventual mean reversion. Watch how the backwardation evolves — and whether those Sunday-night gaps get filled — as the next few sessions sort the signal from the noise.
Reuters reports that fully restoring Venezuela’s refining capacity would cost at least $20 billion, according to experts. The recent earthquakes left the refineries largely undamaged but may divert government resources and attention.
Oil exports have jumped since Washington removed Maduro from power and eased sanctions.
Today, the 955,000-barrel-per-day complex in Falcon state operates at a fraction of capacity, the result of a decades-long decline unrelated to last month’s powerful earthquakes in Venezuela.
In the months before the quakes, Reuters visited the area around the Amuay and Cardon refineries that make up the Paraguana complex, as well as one of Venezuela’s other two active refineries, and interviewed 48 workers, contractors, residents, and experts.
One worker at the 645,000-barrel-per-day Amuay refinery said the site looks “ugly and rusty.” Open-air waste pits are nearly full, residue leaks across pipelines and valve stations, and workers say years of underinvestment, equipment failures, and shortages have left Paraguana struggling to meet Venezuela’s fuel needs.
Reuters found deep decay and little ongoing maintenance at all three facilities, highlighting the scale of Venezuela’s challenge in rebuilding oil infrastructure that serves its citizens, even as President Donald Trump has promised $100 billion in foreign oil investment.
Venezuela’s refineries are both among its most deteriorated assets and essential to domestic consumers. Yet industry executives and analysts told Reuters they are unlikely to attract foreign investment soon.
Recovery from the two earthquakes, which killed more than 5,000 people and caused widespread destruction, has further clouded the refineries’ outlook, said Venezuelan energy analyst Oswaldo Felizzola.
“Right now, the priority clearly appears to be rebuilding and addressing the devastation caused by the earthquakes,” he said.
Felizzola said major refining investments will likely be delayed until 2027 or later as the government focuses on oil production. Restoring full refining capacity would require at least $20 billion, he said, an estimate echoed by other industry experts interviewed by Reuters.
Some U.S. and multinational oil companies have shown interest in Venezuela this year after the United States ousted socialist President Nicolas Maduro in a January 3 raid. But they have little reason to rehabilitate local refineries when U.S. facilities can already process Venezuela’s heavy sour crude.
That leaves interim President Delcy Rodriguez’s government with limited prospects for funding refinery repairs through foreign oil companies or the refineries themselves, which supply domestic fuel at prices well below operating cost under longstanding policies expanded by socialist governments.
Conditions remain severe. At Amuay, workers and a recently retired engineer said a flexicoking unit that once converted heavy, low-value residue into higher-quality low-sulfur fuel now sits idle and blackened.
Fox Weather says the heat is easing, and natural gas traders are taking notice. is getting a clear message from the weather maps, and right now that message is “not so fast.”
The Fox Weather app is highlighting a meaningful pattern shift: moderating temperatures across key demand regions, with relief spreading through parts of the East and Southeast while the heat dome settles more over the West. That cooler-than-feared backdrop is already taking the edge off power-burn demand just when the market needed a strong late-July finish to keep the bulls in control.
Front-month Henry Hub futures are hovering in the mid-to-high $2.60s per MMBtu, reflecting a market that is struggling for upside even in the heart of the cooling season. Layer on the ongoing Freeport LNG maintenance — trains still offline or running at sharply reduced rates since early July, with the turnaround expected to stretch into late August — and you have extra molecules staying home, adding to an already comfortable storage cushion.
Bottom line: milder temperatures plus constrained export demand equals a double dose of pressure. Unless a late-summer heat wave reappears or Freeport comes back faster than planned, natural gas looks set to stay range-bound and soft heading into the shoulder season. Keep a close eye on those weather models and the weekly storage builds — the atmosphere is telling us summer may be winding down a little early.
