Ongoing Impact of US/Iran War on US Energy Markets
Over the prior weekend another Trump social media post has taken center stage as we enter week six of the U.S./Iran war.
“Tuesday will be Power Plant Day, and Bridge Day, all wrapped up in one, in Iran. There will be nothing like it!!!”
We believe in keeping our posts family friendly, so we are not displaying the latter part of his quote. However, the point that quote is attempting to make is this: Iran must open the Strait of Hormuz or see important national infrastructure bombed.
Rhetoric and Possible Cease-Fire Cause Modest Decline in Crude Oil Prices
This rhetoric resulted in only a modest decline in crude oil prices before Monday trading, assisted by news stories that both sides are supposedly weighing a cease-fire arrangement. Pakistan has been acting as an intermediary between the two nations, and Reuters reported that Iran has communicated their desired positions.
Market Volatility and Dropping Brent Oil Prices
As energy, equity, bond, and other markets continue to deal with volatility due to the war, an interesting phenomenon is taking place in global oil markets. North Sea Brent oil, considered one of the world’s well-known indexes, has started to trade BELOW the U.S. index WTI. Brent oil took greater precedence a few weeks ago when Middle East crude grades were unable to traverse the Strait of Hormuz. At the time of this post, the June 2026 Brent contract (which is considered prompt) is trading at $2-3/bbl BELOW the prompt WTI contract (May 2026).
We wanted to mention this because traditionally Brent prices have traded above WTI. Even a few weeks ago, Brent prices shot up to almost $120/bbl while WTI struggled to clear $110/bbl. Why has this relationship started to flip?
A Few Thoughts on the Current Situation
While we don’t have a definitive answer for this question, we do have a few thoughts about why this situation might be occurring now.
- As logistical concerns remain for Middle Eastern crude, there may be more emphasis globally on purchasing U.S. crude.
- It is also possible that part of the original U.S. position for the war was based on the fact that the U.S. has limited logistical need for global oil.
- However, growing challenges make the U.S. a central export location and subject to international price pressures.
- Finally, overall trading liquidity in WTI may be a relatively “safer” spot than some of the Brent financial positions.
Conclusion
Additionally, we have this final observation – war risk has and will continue to have the potential to drive U.S. energy prices higher. It is not possible for the U.S. to remain “disconnected” from the geopolitical risks that the rest of the world’s energy markets are experiencing on a daily basis.
The events and factors driving the risks we are seeing today, continue to shift and transform quickly. Westlark Advisors will be closely watching the war and other developing events to keep abreast of their impacts on the global energy markets.
Current Events – April 2026
By JD Buss
