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WTI jumped more than 2% Monday morning, with June delivery futures trading near $97–$100 per barrel and Brent pushing back above $103, after President Trump rejected Iran's counterproposal on Sunday with a Truth Social post that read "I have just read the response from Iran's so-called 'Representatives.' I don't like it — TOTALLY UNACCEPTABLE!" Tehran's response to that rejection was roughly what you'd expect: Iranian state media framed the exchange as a rejection of what they characterized as a demand for surrender and vowed that the country would "never bow."
So here we are — ten weeks in, back above $100 (brent, $97 WTI) on the diplomatic breakdown, with Saudi Aramco CEO Amin Nasser warning analysts on a Monday call that if the Strait of Hormuz closure is delayed by even a few more weeks, normalization could stretch into 2027 — and that even under the best-case scenario, it would "still take months for the market to rebalance."
That is not a minor footnote, as this is the world's largest oil exporter saying the market has probably already seen the bottom of this pricing cycle, regardless of what happens diplomatically in the next two weeks.
The IEA estimates the war is disrupting roughly 14 million barrels per day of global supply, the largest such shock on record; A billion barrels of global inventory gone in ten weeks.
The OPEC 2020 deal negotiated by President Trump in his first term saw Russia and the Saudi's agree to a two-year reduction in supply of over 9M/bpd, but that was during the largest demand destruction event since the dawn of the oil era, due to the COVID lockdowns. However, we have no such lockdowns now, as global demand, prior to the start of the war, was as strong as it has ever been.
Since the start of the war and the closure of the Straight of Hormuz, we have seen structural damage to Gulf Coast infrastructure that can't be repaired with a peace treaty. We have seen insurance markets that are dead in the water and will have to be reset entirely, as the world on the other side of this war will not look the same as it did before February 28th, 2026.
In other words, we should all be prepared for elevated prices of just about everything, for an indeterminable period of time.
Propane will be one of the more fascinating products to watch, as its underlying supply and inventory factors are definitely bearish, as we still sit with the most inventory on record for this time of year, and propane production should remain strong due to the global demand for US sourced LNG, which was already strong before the war in Iran and with the closure of the Straight of Hormuz, that appetite is even stronger.
However, we will need to monitor the rate of inventory building over the next few months to see if our inventory overhang remains in place, or of US exports can begin to eat away at the surplus.
One factor for propane inventories, especially during the spring and summer, when home heating demand is nearly non-existent, is petrochemical consumption of propane. If history can be any guide, when we have seen significant disruptions to global supply, and the 1973 Oil Embargo and price shocks are the only historic analog to what we are seeing now (and this current supply disruption dwarfs that), uncomfortable inflation realities are likely to follow...and that means the prices for everything goes higher, which leads to fewer people buying things, which means a drop in production, which means less propane is used up for the process of manufacturing durable goods.
So the propane world finds itself in uncharted waters right now. On the one hand, fundamentals remain bearish, and demand destruction in the durable goods sector due to inflation seems unavoidable.
On the other hand, the prices for physical oil delivery are likely to spike in the near future, and propane values will get dragged along with it...and if the supply disruptions via the Straight of Hormuz lasts months longer, instead of weeks longer, we truly could see this geopolitical war premium that is a baked into propane prices right now, carry forward into the fall and winter, when demand for propane is at its highest.
Propane retailers find themselves in a precarious Catch-22 moment right now, likely feeling damned if I do, and damned if I don't, as it relates to fixing prices for the upcoming winter, because a logical case can be made for both strategies.