Energy Prospectus

Oil prices continued to rise on Tuesday, with WTI crude futures trading near $76 a barrel, the highest level since January 2025, extending an over 6% gain from the previous session.
> The escalating conflict with Iran is disrupting fuel shipments and raising concerns about further supply disruptions across Middle East oil and gas markets. Yesterday, Aramco halted operations at Saudi Arabia’s largest oil refinery in Ras Tanura on the Persian Gulf coast following a drone strike.
> Today, falling debris from an intercepted drone triggered a major fire at the UAE oil-trading hub of Fujairah, although normal operations have since resumed.
> Meanwhile, Iran has not officially closed the Strait of Hormuz, and Foreign Minister Abbas Araghchi stated the country has no intention of doing so. Nevertheless, shipping activity through the narrow strait has largely halted, and many insurers are planning to withdraw war-risk coverage for vessels entering the Persian Gulf.

US natural gas futures climbed more than 5% to around $3.11 per MMBtu on Tuesday, building on Monday’s 3.5% gain amid concerns of further supply disruptions due to widening conflict in the Middle East.
> A high-ranking Iranian official on Monday said the Strait of Hormuz has been closed and warned that it would “burn any ship” attempting to transit the strategic waterway. The Strait is a critical chokepoint for global energy flows, accounting for roughly 20% of LNG exports, primarily from Qatar.
> Compounding the risk, QatarEnergy, one of the world’s largest LNG producers, halted operations after Iranian drones targeted its Ras Laffan and Mesaieed facilities.
> Any prolonged disruption could boost demand for US LNG, particularly as the domestic natural gas market is running a 0.3% deficit relative to its five-year average.
> On Thursday EIA is expected to report a draw from storage for the week ending February that was larger than the 5-year average.

From Trading Economic this afternoon:
WTI crude oil futures eased toward $73.8 per barrel on Tuesday, paring massive gains as President Trump’s pledge to provide naval escorts for tankers in the Strait of Hormuz calmed immediate supply panic. While prices surged over 8% earlier in the session following drone strikes on Saudi Arabia’s Ras Tanura refinery and fires at the UAE hub in Fujairah, the military commitment to ensure the free flow of energy triggered a sharp reversal from daily peaks. Despite the retreat, oil remains at June highs as shipping activity through the Persian Gulf remains stalled and insurers withdraw war-risk coverage. This logistical paralysis limits the relief from the escort announcement, as roughly one-fifth of global consumption remains at risk. Furthermore, the death of Iran’s Supreme Leader and the subsequent 4-day escalation of strikes on Gulf energy hubs continue to fuel volatility. Markets now focus on the resilience of UAE air defenses against a barrage of Tehran-backed missiles.

Bottomline: WTI oil price is likely to stay in the mid $70's for a few weeks unless Iran surrenders.

U.S. Natural Gas
US natural gas futures climbed more than 5% to around $3.11 per MMBtu on Tuesday, building on Monday’s 3.5% gain amid concerns of further supply disruptions due to widening conflict in the Middle East. A high-ranking Iranian official on Monday said the Strait of Hormuz has been closed and warned that it would “burn any ship” attempting to transit the strategic waterway. The Strait is a critical chokepoint for global energy flows, accounting for roughly 20% of LNG exports, primarily from Qatar. Compounding the risk, QatarEnergy, one of the world’s largest LNG producers, halted operations after Iranian drones targeted its Ras Laffan and Mesaieed facilities. Any prolonged disruption could boost demand for US LNG, particularly as the domestic natural gas market is running a 0.3% deficit relative to its five-year average.