Straight of Hormuz: Israel launched extensive strikes on Iran last night, targeting nuclear and military sites, aiming to prevent Tehran from developing nuclear weapons, while Iran denied such intentions and has previously threatened to close the Strait of Hormuz in retaliation to Western pressure. The Strait is a critical chokepoint for global energy, with about 20% of the world's oil and nearly all of Qatar’s LNG exports passing through it. Though Iran has repeatedly threatened to block the strait, it has never acted on those threats, and the U.S. Fifth Fleet patrols the area to safeguard shipping. Historical tensions in the region, including past conflicts and sanctions, have repeatedly raised concerns about disruptions to global oil trade through this narrow but vital waterway.
G7 Russian Price Cap: Most G7 nations, led by the EU and Britain, are prepared to lower the $60-a-barrel price cap on Russian oil to $45, even without U.S. support, amid falling global oil prices that have made the current cap less effective. The move aims to tighten sanctions on Russia and reduce its oil revenue, with Canada and possibly Japan showing support ahead of the June 15–17 G7 summit. While the U.S. remains undecided, some U.S. lawmakers, like Senator Lindsey Graham, support the reduction and are pushing for stricter sanctions. Despite U.S. hesitation, European influence in shipping insurance and tanker regulations gives them leverage to enforce a lower cap independently.
Canadian Fire Update: Cenovus Energy announced it has restarted production at its Christina Lake oil sands facility in Alberta after a temporary shutdown caused by nearby wildfires. The wildfires in May disrupted operations for several oil producers in the region, including Cenovus, Canadian Natural Resources, and MEG Energy. Cenovus resumed operations on June 3, gradually increasing output throughout the week. The company reported no damage to its infrastructure and continues to monitor wildfire conditions, though it had earlier declared force majeure on its Christina Lake heavy crude supply.
Market Overview: Oil prices are surging by over $5 to multi-month highs on Friday morning following Israeli airstrikes on Iran, which triggered retaliation and heightened fears of Middle East oil supply disruptions. The sharp price increase marked the largest intraday jump since 2022, driven by geopolitical tensions similar to those seen after Russia invaded Ukraine. Israel claimed it targeted Iran’s nuclear and military infrastructure, prompting warnings of further retaliation from Tehran. Despite the conflict, Iranian oil facilities and the vital Strait of Hormuz remained unaffected, maintaining stable oil flows for now. Analysts remain cautious, suggesting the price rally may be short-lived unless a broader conflict disrupts supply, while some markets could feel economic strain from rising energy costs.

The EIA expects that retail gasoline prices will decrease across most of the United States through the end of 2026, with the exception of the West Coast. Currently the U.S. average retail gasoline price is $3.10 per gallon and the average in the Midwest (PADD2) is $2.96 per gallon.The forecast decreases in retail gasoline prices are primarily the result of lower expected crude oil prices, which comprise about half of the total price of gasoline. The EIA expects crude oil prices to average about $7 per barrel cheaper in 2026 compared to 2025.

Oil prices finished higher more than 7% Friday following an Israel air attack on Iran overnight. U.S. West Texas Intermediate crude saw its largest intraday spike since 2022, briefly rising over 14% before settling lower. Israel claimed it struck Iranian military and nuclear sites but avoided oil-related targets, reducing the immediate threat to energy supply. Iran has wasted no time in their response, with missile strikes being reported in Israel, including Tel Aviv. Israel said today it will launch strikes against Iranian oil refineries and natural gas sites if Iran targets populated areas within Israel, and it looks like Iran is not shying away despite the threat. Analysts warned that significant market impact would only occur if vital infrastructure, like the Strait of Hormuz or Iranian oil terminals, were disrupted. Despite heightened tensions, Iran’s oil facilities remained operational, and experts cautioned that any move to block the Strait could harm Iran’s own economy and relationship with China.
