Crude oil prices moved higher on Monday morning as military tensions between the United States and Iran intensified, with the West Texas Intermediate prompt-month contract rising $2.85 to $86.25 per barrel as of 7:30 AM Central Time on August 31, 2026, according to AEGIS Market Insights. The WTI price climb above $86 per barrel followed US military strikes on an island in the Strait of Hormuz and subsequent Iranian retaliatory attacks on the United Arab Emirates and Jordan. Despite the geopolitical escalation, crude flow through the strategically critical Strait of Hormuz remained relatively stable, with an estimated 6 to 8 million barrels per day continuing to transit the waterway, according to Bloomberg data cited in the report.
The maintenance of tanker traffic through the Strait has helped temper supply concerns, though the ultimate direction of the conflict remains uncertain. Ole Hansen of Saxo Bank noted that market participants remain cautious about building positions, stating: "The key is to watch the barrels, and as long as they continue to flow though the Strait of Hormuz, the buying appetite in the market remains muted for fear of being caught out." Goldman Sachs warned that the intensifying US-Iran and Russia-Ukraine conflicts are placing additional pressure on the global refining system. The investment bank reported that refinery outages are running 60 percent above seasonal norms, while product inventories continue to decline despite some demand destruction.
Goldman Sachs projected that the US diesel production margin from Brent crude would average $63 per barrel. Morgan Stanley adjusted its crude oil forecasts, trimming its third quarter 2026 WTI forecast to $85 per barrel from $86 per barrel, but raising its fourth quarter forecast to $96 per barrel from $76 per barrel. Natural gas prices moved in the opposite direction as a significant shift in Lower 48 weather patterns brought cooler temperatures.
Natural gas declined 1.3 cents to $2.875 per million British thermal units as of 7:22 AM Central Daylight Time. The Lower 48 region lost nearly 8 degrees Fahrenheit over the forecast period, with the most significant temperature declines concentrated along the East Coast and in the Rocky Mountains, according to data from Criterion cited in the report. Average storage week temperatures were forecast to remain in the 78-degree Fahrenheit range for the week ending September 4, before declining by 2 degrees Fahrenheit over the following two weeks to 76.5 degrees and 74.4 degrees respectively.
Liquefied natural gas feedgas demand reached a fresh two-week high, exceeding 19.3 billion cubic feet per day on the morning of August 31. Mexican natural gas exports demonstrated strength during August, averaging 8.2 billion cubic feet per day, representing a 0.4 billion cubic feet per day increase compared to July levels. Weather-related risk to natural gas demand appeared limited.
The remnants of tropical system Dolly shifted its track southward, posing reduced threat to Florida, while a new storm forming in the Gulf of Mexico was expected to track toward Houston and Central Texas as either a tropical storm or depression, presenting minimal threat to natural gas demand. Beyond commodity price movements, data center expansion has emerged as a significant political issue. Fifteen states have introduced legislation to restrict data center buildout, a trend worth monitoring given that data center development represents a key driver of natural gas demand growth over the coming decade.
Liquefied natural gas, identified as the primary demand growth driver, has not encountered similar legislative headwinds, according to reporting from Natural Gas Intelligence cited in the report.
Source: aegis-hedging.com