Are oil prices already signaling a quick victory in Iran? We’ve seen some dramatic moves in Europe—especially when it comes to the diesel crack spread, gas oil, and other markets. Global oil and LNG flows are still going to be major challenges in the near term with transit and production, storage, risk to infrastructure, yet longer term there is light even as we go through the storms of war.
Oil prices in the US are backing down after a report from the New York Times that Iranian operatives have reached out looking for terms to end the war. It’s unclear if President Trump will grab that olive branch but because the market surge in the crude was much less than many people would have predicted the back end of the futures curve is suggesting that this conflict will be over very soon.
This comes as President Trump makes a bold move to assure safe passage through the Strait of Hormuz by opening it up with some insurance, but also potentially using the U.S. Navy to escort some oil tankers. President Trump said he will use the United States Development Finance Corporation (DFC)—a federal agency—to provide political risk insurance and financial guarantees for maritime trade in the Gulf. On Turth Social he said that “Effective IMMEDIATELY, I have ordered the United States Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf. This will be available to all Shipping Lines.”
It’s obvious that Iran is running out of time, as President Trump emphasized during his Oval Office remarks on March 3, 2026, while taking questions from reporters alongside German Chancellor Friedrich Merz concerning Iran’s air force and defenses: “They have no navy. It’s been knocked out. They have no air force. It’s been knocked out. They have no air detection. That’s been knocked out. Their radar has been knocked out. Just about everything’s been knocked out.” The issue now is a question of how long Iran can cause havoc in the world.
As I said yesterday, Iran is not very good at making friends or influencing people – in a positive way – right now. After attacking all its neighbors, including OPEC members, they have galvanized the world against them—even their friends in Russia and China are standing back from this conflict. The impact on China is going to be huge.
Not only are we seeing a big surge in European natural gas prices, but if the Strait of Hormuz is shut down, China’s passport to get more oil will be affected. Keep in mind that China has been preparing for this possibility for some time, as they’ve been building the largest strategic petroleum reserve on the face of the planet, with over a billion barrels of oil. Most of that oil, of course, had been coming from Iran and Russia at a huge discount.
So, the days of cheap Chinese oil purchases may be coming to an end, and they will be forced to go into the open market for oil purchases in the short term. Because they have built up such a big reserve, they can always go to their strategic petroleum reserve. That brings up another point—the United States has not even pulled all its levers. When is that? What we need is more compensation when it comes to stabilizing oil prices. At the end of the day, what can happen here is that President Trump could release oil from our strategic petroleum reserve. He probably could get the support of our neighbors to do so. Unlike Biden, he is waiting to do that until it’s necessary. At this point, President Trump is suggesting that it may not be necessary, and he may be right.
Iran’s recent actions have isolated it, even from allies like Russia and China. Rising European natural gas prices and potential closure of the Strait of Hormuz threaten China’s oil supply. China’s strategic petroleum reserve, along with commercial inventories, is estimated at 1.1–1.5 billion barrels, much of it sourced from Iran and Russia at discounted rates—an advantage that may fade as China opens its markets. The U.S. can stabilize oil prices by releasing reserves but, according to President Trump, we haven’t played that part yet, and unlike the previous administration that used the Strategic Petroleum Reserve for political purposes, he’s wisely holding back that opportunity for right now.
We are aware that we are still in dangerous waters and will see more volatility. Because of reduced transit through the Strait of Hormuz, oil-storage tanks in the region are filling up fast, so Iraq’s already cutting back production sharply to avoid overflow issues.
prices are spiking hard in Europe and Asia thanks to major disruptions with Qatar shutting down 1/4 of the global LNG exports but the US market is buffered because of record production. In the US we’re already exporting as much LNG as we can and the rest of that is a domestic market here in the US.
Overseas stock markets are getting hit with South Korea’s Kospi dropped a record 12% in one day, and Dubai’s index fell nearly 5% after reopening from a trading halt tied to the attacks. The U.S. is holding up better as a net energy exporter, so it’s more shielded from supply interruptions compared to big importers in Asia and Europe.
India’s feeling especially vulnerable here, since about 40% of its crude imports usually flow through that strait, and the country’s got thin stocks (only around 25 days’ worth of crude, with similar low inventories for fuels like gasoil and gasoline).
Russian crude imports to India had dipped to about 1.1 million barrels per day in January (lowest since late 2022) due to U.S. tariff pressures, but they bounced back to around 30% share in February according to Reuters.
Now, with the disruptions, Russia’s ready to step up and divert oil to India—there’s about 9.5 million barrels of Russian crude on vessels already near Indian waters that could arrive in just weeks to help ease the squeeze for refiners.
Obviously right now the US military has done an amazing job with this attack on Iran. One would assume that for the Iranian leadership they realized that this is like their Hitler in the bunker moment. Sure they can continue to cause havoc in the world, but the regime is in its last days if not hours.
