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Good morning. The week opens on a tense note, with crude oil surging once again as U.S.-Iran diplomacy deteriorated over the weekend.
Crude Oil: Talks Break Down, Prices Spike Back Toward $97
The ceasefire window that briefly opened last week has slammed shut. President Trump scrapped plans to send special envoy Steve Witkoff and Jared Kushner to Pakistan for ceasefire talks, stating that the negotiations could happen by phone and writing on Truth Social that there was "too much time wasted on traveling." Tehran returned the favor. Iranian President Pezeshkian reiterated that Tehran would not engage in "imposed negotiations under threats or blockade," leaving the Strait of Hormuz effectively closed as the conflict enters its ninth week.
WTI crude rose to $95.83 per barrel this morning, up about 1.5% from Friday's close, after touching as high as $96.70 in early trading. It was trading just over $97/bbl as of 10:30 AM CDT. The session's intraday volatility tells the story of a market caught between fear and hope: Brent eased back toward $106 after reaching nearly $108 earlier in the session, following reports that Iran had submitted a new proposal via Pakistani mediators calling for a ceasefire extension and delaying nuclear talks until the U.S. naval blockade is lifted. Whether that proposal has legs remains the day's central question.
Goldman Sachs raised its oil price forecast on Sunday, now expecting Brent to average $90 per barrel in Q4, up from $80 under its prior forecast, citing assumptions that Gulf exports will not normalize until the end of June and that production will recover only slowly. Goldman analyst Daan Struyven warned clients that the economic risks are larger than the crude base case alone suggests, given upside risks to oil prices, unusually high refined-product prices, product-shortage risks, and the unprecedented scale of the shock.
The IEA has already characterized this as the largest energy supply shock on record.
Propane: Quiet Domestically, But the Crude Tide Keeps Rising
Propane markets are not the story today, but they continue to absorb the crude shock. The propane-to-WTI ratio remains historically compressed in the low-to-mid 30s, as geopolitical spikes historically push the ratio down by widening the crude premium faster than NGL markets can respond. Domestic stocks remain well-supplied heading into injection season, offering a partial buffer — but with WTI threatening to test $100 again on any further diplomatic setback, the floor under propane prices is rising whether the fundamentals warrant it or not.
Retailers watching the Q4 2026 forward market at roughly 45% of WTI would be wise to keep their powder dry; if crude eases as Goldman projects into year-end, that ratio should begin to normalize, potentially offering a more favorable lock-in window.
Energy Analyst John Kemp also offered these thoughts today regarding hedge fund activity in the petroleum space.
"Investors made no significant changes to their positions in crude oil and refined fuels last week, as indirect diplomatic negotiations between the United States and Iran continued but appeared to make only limited progress.
The Persian Gulf remains in a state of not-quite-war but not-quite-peace, while dual embargoes imposed by the United States and Iran have kept the Strait of Hormuz closed to nearly all oil tankers.
Global stocks of crude and refined fuels are depleting by more than 10 million barrels each day the Strait remains closed, with a cumulative loss of almost 600 million barrels so far since the conflict began.
Global oil supplies are tightening, but investors are reluctant to augment already bullish positions because of the risk that negotiations could reopen the Strait at any moment."