Newsletter · · Ashutosh Agarwal
Market Rejects the Hormuz Control Claim as Oil Keeps Climbing - Oil: OPEC+, Shale & Geopolitics - Week of August 14, 2026
Energy podcasts weigh Washington's claim of total Strait of Hormuz control against a climbing Brent price, record refining margins, and second-order shocks in European gas, diesel, and fertilizer for the week of August 14, 2026.
Oil: OPEC+, Shale & Geopolitics
Week of August 14, 2026: Market Rejects the Hormuz Control Claim as Oil Keeps Climbing
Last Friday the story was a peace deal that kept getting more expensive. This week it hardened into something colder: America has, in effect, stopped pretending a clean exit is coming, and started saying so out loud. President Trump swung from "low-keying it" to two new, contradictory postures at once: a claim that the U.S. Navy now controls the Strait of Hormuz "100%," and a strategy of grinding Iran down with an economic squeeze instead of more bombs. Iran, for its part, doubled down: the strait stays shut until Washington meets a list of demands that now reportedly tops out at war reparations and the return of frozen assets.
The market did not buy the control claim. Oil kept climbing. Brent, the global benchmark, rose about 12% over five trading sessions to roughly $89 a barrel, physical cargoes changed hands closer to $100, and the U.S. government's emergency oil stash fell below 300 million barrels for the first time since 1983. Underneath the headlines, three quieter shifts did the real work this week. A new official narrative took shape: that pipelines will soon make the strait "irrelevant." The earnings season made brutally clear where the money actually is: refiners, not drillers. And the damage kept leaking outward, into European natural gas, into diesel, and into the fertilizer that feeds next year's crops. Here is what the week's podcasts actually said.
"We control it 100%" and almost nobody agrees
The president's language got bigger even as the facts on the water stayed stuck. On Bloomberg Daybreak: US Edition, Trump was quoted flatly: "We totally control the Strait of Hormuz. We have control over it. Nobody else, only us. Our Navy is unbelievable," adding that Iran "would get blown away if it took action." On Squawk Box Europe Express he pushed the image further: "We have a blockade that's been infallible. It's a steel wall… we've mineswept the entire Strait… we control the Strait 100%."
Then the experts fact-checked him, and the picture fell apart. On Bloomberg Businessweek, the hosts asked Noam Raedan of the Washington Institute for Near East Policy directly whether the U.S. controls the strait 100%. Her answer: no. "Throughout this war, Iran has established a new navigational order… Iran remains in control of traffic in the Strait of Hormuz." The old shipping lanes (the inbound/outbound routes ships have used since 1968) sit unused because they are mined. "In June, the assessment was that there were around 80 mines and that getting rid of those mines was going to take a long time… according to an international association of tanker owners." And Iran, she argued, has no interest in clearing them, because the disruption is the point: "What Iran now is trying to do is convert this wartime disruption into a lasting advantage." Her blunt bottom line for anyone waiting for a return to normal: "It won't be an easy way back at all. I do not expect, even if the war ends, for us to immediately return back to normal."
The workaround she described is the same one Gulf producers have been quietly building: ship oil out on smaller tankers within the Gulf, then transfer the cargo to bigger ships waiting in the Gulf of Oman, outside the danger zone. "The United Arab Emirates has been leading this way of trading," she said, and even Abu Dhabi's national oil company "has chartered some VLCCs" (very large crude carriers) "in order to maintain the flow." It works, but it is expensive and slow, and, as she put it, "we are not back at all to the oil loading average that existed before the war."
The mediator this week was Pakistan. On Bloomberg Businessweek and again on Squawk Box Europe Express, Pakistan's defense minister said the two sides were "close to some sort of arrangement" but offered no details, and Iran's newly appointed national security chief "doubled down on Tehran's stance that the Strait of Hormuz will remain closed" until the U.S. ends the war and releases frozen assets. The gap between "close to a deal" and "closed until you surrender" is the whole story.
The economic-squeeze bet, and why the timing runs against Trump
If bombs are off the table, the plan is to starve Iran out. On The Julia La Roche Show, former Treasury and intelligence official Jim Rickards laid out why he thinks that bet is misjudged, and titled his view without hedging: "Trump's on the losing side of that bet." His logic is a game of chicken with a clock. "You have elections on November 3rd. You might lose the midterm elections… The Democrats in control of the House… they'll impeach you." Iran, he argued, only has to keep the pressure on and wait, because "the U.S. midterm elections are just a little over two months away… with mail-in ballots and drop boxes, the election starts in September." Even a sudden drop in gasoline prices, he said, "won't matter" if it lands after votes are already cast.
His most important point for understanding why the strait can stay shut with almost no effort: Iran doesn't have to stop every ship. "All they have to do is blow one up every four or five days, which they're doing… a few drones and a few missiles twice a week." Why is that enough? Because of who bears the risk. "The cargo owner, the vessel owner, the captain, the crew, the insurance companies, none of them want to risk being the one that gets blown up. Even if you can only blow up maybe one in 100, you don't want to be that one." He also reminded listeners that the Iran–Oman deal Trump touted last week was one the U.S. "was not even a party" to, and that its conditions (withdraw the naval blockade, pull the aircraft-carrier groups home, shut U.S. bases, lift sanctions, release frozen assets) were "tantamount to complete surrender by the United States."
The military reason the squeeze is now Plan A came through most clearly on The Global Gambit, where Dr. Jason Campbell of the Middle East Institute (15 years at the RAND Corporation) said the U.S. has run its arsenal down. "We've seen more recent reports of the U.S. running very low on some of its long-range surface-to-surface missiles, the ATACMS, the PRSMs… some reports are the U.S. has expended roughly 80 percent of that." (ATACMS and PRSM are the Army's long-range precision missiles.) The consequence, in his words: America no longer has "escalation dominance." A ground operation big enough to force the strait open "would require multiple divisions," and he doubts the U.S. could even mass that many troops in the region safely, given Iran's demonstrated ability to hit U.S. housing on a base in Jordan with precision. Campbell's framing of Iran's real weapon is worth keeping: "the nuclear option, so to speak, is not actually a nuclear weapon. It's the capacity to leverage geography to deter the United States and risk the global economy."
The most caustic version of the "Iran already won" read came from Peter Schiff on The Peter Schiff Show Podcast. He put Iran's demand list at "$300 billion" in reparations plus a U.S. withdrawal, sanctions relief, and control of the strait, and argued the whole exercise redefined victory downward: "We had an open Strait of Hormuz before the war started. So now we've redefined victory to getting things back to the way they were before we screwed it all up." His thesis, repeated all year: "Iran wins the war by surviving. And they've actually more than survived."
The new official story: "pipelines will make the strait irrelevant"
Here is the fresh idea that traders are now wrestling with: a bullish counter-narrative coming straight from the top of the U.S. energy establishment. The claim: keep building pipelines around the choke points, and Iran's grip on Hormuz stops mattering. On Energy News Beat Podcast, the anonymous analysts at Doomberg relayed Treasury Secretary Scott Bessent's line, "the strait will be absolutely irrelevant very soon," and argued Iran may have overplayed its hand: "one wonders whether Iran hasn't quite overplayed its hand… if it dawns on the Iranians that they've been checkmated by Bessent and Wright." (Chris Wright is the U.S. energy secretary.) Doomberg's own read on why oil hasn't cracked lower on this optimism: the market is "repricing the tail risk of blowing up all the assets irreversibly."
The fullest version of the pipeline case came on The Energy Impacts with David Blackmon, where energy economist Tricia Curtis, a senior consultant to the U.S. Department of Energy, made the point that America's own production is the real shock absorber, and that it goes underdiscussed. "We have not seen enough talk… of the U.S. producing nearly 14 million barrels a day. That number came down just a smidge in the past month. But… it's a lot of oil." She pointed to a fact that undercuts the panic: U.S. crude and refined-product stocks, excluding the emergency reserve, are "over 1.2 billion barrels" and rising week over week, "very, very healthy," because refineries have run flat out at about 96% of capacity. Her verdict on how the system has coped: "When you really look at how the oil market has adapted to this war, it's extremely impressive… people were calling for a lack of jet fuel and Heathrow is going to be shut down in April and May and June, and it never happened."
But her co-host Stu Turley pushed back with the counterweight, and it's the reason nobody can fully relax. "The output that the Gulf states have done in February of '26 was 108 million barrels per day… We're missing a billion four worth of oil out of the market right now," that is, roughly 1.4 billion barrels lost cumulatively since the war began. Iran has "23 tankers sitting there" plus a "dark fleet" of "400 tankers," and Russia's outbound capability "has been eviscerated." His landing spot: "I think that we are going to see oil between $75 and $85… anything more than [96% refinery runs] and things are going to have to start coming offline for maintenance."
The skeptic's rebuttal to the whole "pipelines fix it" thesis came from Noam Raedan back on Bloomberg Businessweek. Pipelines help, she said, but "you cannot completely get rid of the Strait of Hormuz." Iraq is the tell: it keeps talking about pipelines but "throughout the past year failed to implement those pipelines," so it is now asking Tehran for permission to keep sending Basra crude out through Hormuz. To say the world doesn't need the strait "is not based on solid data."
Where the price actually is, and where it might go
Nobody has a tidy number, and the honest voices admit it. Brent kept grinding up on deal skepticism, about $89 and up roughly 12% over five sessions per Bloomberg Daybreak: US Edition, which also flagged two ominous supply signals: the International Energy Agency now expects global crude inventories to fall this quarter "at more than twice the previously estimated rate," and the Washington Institute's warning that a "frozen" U.S.-Iran conflict (now the most plausible outcome) "could push oil into a range of $100 to $150 a barrel." The emergency-reserve number is the one to sit with: on Squawk Box Europe Express, the U.S. Strategic Petroleum Reserve (the government's emergency oil stockpile) "fell to 298.7 million barrels last week… the lowest level since 1983," a drop of more than 6 million barrels in a single week.
The most grounded price call came from the investors on Telltales, who run real money in family accounts. Their range: "$70 on the downside and $90, but not too much more than $90 on the upside," with the higher end likely "for some number of months. Six months, nine months, 12 months." The mechanics they laid out are useful. Historically about 20 million barrels a day moved through Hormuz, "just 10 ships" of 2 million barrels each. Now they expect "maybe 20 ships a day" but smaller flows, because Iran will let Iraqi crude through (Iraq is about a third Shia) while squeezing Saudi and Kuwaiti barrels. The clever workaround they flagged: for oil that has to go the long way around via the Red Sea, "the people in the Asian market, whether they be India or China… will send their own ships," on the bet that the Houthis "won't put drones and missiles into a Chinese ship." And crucially, the operators aren't fooled by the spike: "The companies that we're involved with are making decisions based on $70 or $75. They're not making decisions based on $90 prevailing."
The real money story: refiners are printing, drillers are disciplined
Strip away the geopolitics and here is the trade the earnings season actually revealed: the profit is in turning crude into fuel, not in pumping crude. On S&P Global's Oil Markets, senior editors walked through numbers that speak for themselves. Marathon, the largest U.S. refiner, saw net income "quadruple to $5.1 billion" in the second quarter. ExxonMobil "posted record diesel output," running its Gulf Coast plants at "95% reliability." And Phillips 66 "captured 98% of the market indicator" as benchmark crack spreads "reached about $70 per barrel, which they described as the highest on record." The crack spread is simply the gap between what a refiner pays for crude and what it gets for the fuel it sells: when it blows out, refining is minting money. The single most striking data point: the Gulf Coast diesel crack against U.S. crude "hit an all-time high of $90 per barrel in late July."
This is not a one-quarter fluke, according to S&P's own analysts, who now see a "stronger for longer" margin world and have added "$3 per barrel to the light Louisiana sweet cracking margin through 2027 to 2030." Why it lasts: Russian and Middle Eastern refineries that were bombed "can't just turn back on," and refiners are so eager to catch these margins they are deferring maintenance: ExxonMobil boosted output "by 200,000 barrels per day… by returning units from turnaround early," Suncor ran its refineries at "92 percent utilization, the highest ever," and Phillips 66 is pushing "high turnaround activity into '27 and '28." That's a warning too: deferred maintenance eventually comes due, exactly as it did after COVID.
The same divide showed up on InvestTalk, where the hosts reframed the campaign slogan: it's not "drill, baby, drill," it's "refine, baby, refine, and also export it." Diesel exports "hit a record 1.9 million barrels a day last week." About a third of Russia's refining capacity is offline, China has banned refined-fuel exports, and "we're not getting nearly as much oil from Saudi Arabia, in fact, it went to zero in July." They quoted Exxon's CEO: "I've never seen the available capacity relative to demand as low as it is today." Roughly 5 million of the world's ~65 million barrels a day of gasoline/diesel/jet demand is offline (nearly 10%), U.S. refining capacity is down about 3% from its 2019 peak, and utilization hit "97.2 percent… the highest level seen since 2018." Their investing caution was honest: the refiners "moved a lot," so "maybe not the time to buy right now," but "structurally, this is a much better place to invest in the energy space."
On the drilling side, discipline is holding: the striking thing is what producers are not doing. On The Mineral Rights Podcast, the hosts noted U.S. land rigs rose from "551" to "572" month over month, "up about 4 percent," even though oil is "close to like 50 percent" higher year to date. "We're not seeing 50 percent additional drilling activity. We're seeing three or 4 percent." Public companies "are reinvesting in dividends to shareholders and then stock buybacks," not a drilling spree. Their long-term view cuts against the spike: once geopolitics fades, "probably $60 to $70 a barrel is probably where we'll end up, or even potentially lower." Back on Oil Markets, the S&P editors added the reason producers can grow output without spending more: technology. Companies are pouring chemical "surfactants" into wells to squeeze more oil out. Exxon says it is still "leaving literally about 90% of the hydrocarbons in the ground," Devon is using AI to autonomously optimize "some thousand wells in real time," and one producer, Aventine, "claimed a 9% productivity gain from surfactants in the Permian."
Diesel is still the crisis, and a hurricane could make it "apocalyptic"
If crude is the headline, diesel is the wound. On FreightWaves Today, Tom Kloza, chief energy advisor for Gulf Oil, said the media is watching the wrong fuel. "Everybody focuses on gasoline… but diesel really powers the economy." In barrel terms, crude is "somewhere in the 80s right now" while "the price of diesel is about $180 a barrel on world markets," and "it could certainly go above $200 a barrel if we had some sort of tropical disturbance in the Gulf of Mexico." His vivid framing of the risk: a hurricane doesn't even have to hit a refinery to "move the choke point from the Strait of Hormuz to the Red Sea to the Gulf of Mexico." The U.S. is the world's supplier of last resort here: "we exported almost 2 million barrels of diesel… to the rest of the world last week," on top of about 3.5 million barrels a day of domestic use, because, as Kloza put it, the U.S. Gulf Coast "is the cleanest dirty shirt in terms of places to find that product for the rest of the world." One telling shift he flagged: the average gasoline retail margin is now "about 40 cents a gallon," versus "15 cents a gallon the first time we had $100 barrel crude," which shows the whole chain is capturing more.
The second-order shock nobody's watching: Putin's hand on Europe's gas
Here is the genuinely new escalation risk this week, and it has nothing to do with Hormuz. On Energy News Beat Podcast, Doomberg connected a Black Sea flare-up to a European natural-gas crisis this winter. The chain: after Ukraine attacked grain ships in the Sea of Azov, Russia "closed the entire Black Sea," bombing Odessa and shutting its port. That matters for gas because, despite all the talk of cutting off Russia, Europe is still quietly taking two big Russian gas flows: the Yamal LNG terminal ("2.5 BCF per day") and the TurkStream pipeline, which runs under the Black Sea and pushes "2 billion cubic feet per day" on to Bulgaria, Romania, Hungary, Greece and Austria. That is "4.5 BCF per day of gas coming from Russia to Europe, when Europe is sitting at 59% gas in storage," versus "like 83%" at this point in 2023. Doomberg's math: that Russian flow equals about 40% of the gas Europe has managed to put in storage. "Putin shuts off the gas because it escalates with Turkey… and that gives you a sense of the trouble Europe would be in." Layer on a dry summer (his words: "it's hard to get coal through the Rhine… you can't run nuclear power plants in France because the rivers are too dry"), and Europe's energy position is, in his words, one of "strategic bankruptcy." One relief valve did open: on Squawk Box Europe Express, Ukraine "reportedly halted its campaign of drone strikes on oil tankers in the Black Sea following a request from" U.S. Vice President J.D. Vance, who worried the attacks were "further destabilising oil markets and harming U.S. companies."
Fertilizer's ticking clock, and a wheat market set up to squeeze
The Hormuz story reaches all the way to next year's dinner table, and this week two agriculture podcasts put a deadline on it. On AgriTalk PM, AgResource president Dan Basse spelled out the mechanism: the "urea, that sulfur that is needed by the Chinese to make phosphate is not available" because of the strait, "and we're getting to the point where if it doesn't become available, let's say by the end of September, we're really missing our opportunity." The kicker: "it looks like the Iranians are likely to keep this all closed until the midterm elections… which really puts us behind the 8-ball." Basse also connected the grain side to the war. Russia is "already 30% shuttered," and its biggest grain export port, Novorossiysk ("about 40% of its trade") has been hit, with "silos still burning." If Russia exports "25 [million tons of wheat] instead of 45," that shortfall "becomes to be substantially important." He noted USDA cut its U.S. corn yield to 180.7 bushels an acre (and he thinks it drifts lower), pushing corn and wheat stocks-to-use ratios to "their second lowest level on record," the tightness that turns small supply losses into big price moves. His advice to farmers: "buy breaks, not sell rallies."
That sets up a specific trade, flagged on Macro Voices. Large speculators went "about 15,000 contracts net short" wheat in a single week ("roughly 11,000 fresh new shorts… betting that wheat goes lower") as of August 4, right before the latest Black Sea escalation. Since "Russia right now controls 22% of global wheat exports," any real disruption "can become a global wheat problem pretty quickly, comparable to the lead-up to the 2022 Russia-Ukraine war," and those fresh shorts "may suddenly have to buy it back." On the same show, Michael Howell of Crossborder Capital tied the energy spike to markets more broadly: higher oil "tends to be inflation-inducing… higher bond yields," and a jump in oil prices "has normally been an ending feature of bull markets," which is why he's "scaling back beta exposure within equities."
Natural gas: Canada finally hits the accelerator
With so much of the world's gas trade tangled in war zones, North America keeps stepping into the gap, and this week the fresh story was Canada. On the RBN Energy Blogcast, Housley Carr explained that Canada, which didn't ship its first LNG cargo until June 2025 ("more than nine years after" the first U.S. Gulf Coast terminal), is now "firing on all cylinders," with plans to "more than triple its current export capacity of 14 million tons per annum, or 1.8 BCF per day, by the early 2030s." (Feed gas, the pipeline gas fed to an export plant to be chilled into liquid, actually dipped to about "1 BCF per day in July," the lowest since December 2025, on equipment problems, but is expected to rebound.) The pipeline behind it, Coastal GasLink, would expand to "at least 4.2 BCF per day, and possibly as much as 5." What changed: Prime Minister Mark Carney's government is "hell-bent on energy trade diversification" beyond the U.S., its "One Canadian Economy Act" caps big-project reviews at two years, and First Nations "have taken equity positions in most of the new projects," including an option worth up to "1 billion Canadian dollars" for a group of five First Nations near the LNG Canada site, "thereby speeding their regulatory approvals." The project pipeline, Cedar LNG (0.4 BCF/d), Woodfibre (0.3), LNG Canada Phase 2 (1.8), and KSI Lisims (1.6), is a slow-burn bullish story for North American gas supply well into the 2030s.
The bottom line
This was the week America dropped the pretense of an easy exit. President Trump stopped claiming a deal was imminent and instead claimed something bolder and, by nearly every expert account, false: that the U.S. Navy controls the Strait of Hormuz "100%." The reality on the water, per the analyst who tracks it, is a "new navigational order" run by Iran, with the old shipping lanes still seeded with roughly 80 mines Tehran has no interest in clearing. So Washington's Plan B is an economic squeeze (grind Iran down with sanctions and a blockade), but the clock runs the wrong way: the midterm elections are ten weeks out, gasoline is near $4, and, as Jim Rickards put it, Iran only has to "blow up one [ship] every four or five days" to keep the whole Gulf bottled up. Meanwhile the U.S. has burned through an estimated 80% of its long-range missiles, so more bombing isn't really on the table either.
The market rendered its own verdict. Brent climbed about 12% over five sessions toward $89, physical barrels traded near $100, the IEA now sees inventories draining twice as fast as it thought, and the U.S. emergency reserve slipped to 298.7 million barrels, a level last seen in 1983. Against that, a new bullish narrative is forming from the top of the U.S. energy establishment: build pipelines around the choke points and, as Treasury Secretary Bessent put it, the strait becomes "absolutely irrelevant." America's near-14-million-barrel-a-day output and healthy 1.2-billion-barrel product stockpile are the reason the doomsday price never showed up. But the skeptics have the better of the near term: Iraq still can't quit Hormuz, and 1.4 billion barrels of Gulf supply have already gone missing.
The clearest, most investable takeaway had nothing to do with Tehran: refiners are printing money and drillers are keeping their discipline. Marathon's profit quadrupled to $5.1 billion, Phillips 66 booked its highest crack spreads on record, and the Gulf Coast diesel margin hit an all-time high of $90 a barrel in late July, a "stronger for longer" setup that analysts now expect to run through 2030. Producers, by contrast, added just 3-4% more rigs into a 50% oil-price rally, funneling the cash into buybacks and dividends and squeezing more oil out of existing wells with AI and chemicals rather than drilling new ones.
And the damage keeps widening past oil. Diesel is the real crisis: $180 a barrel wholesale, with a Gulf hurricane capable of pushing it "above $200." Fertilizer has a hard deadline: the phosphate inputs stuck behind Hormuz need to move by the end of September or next year's crop nutrition gets hit. Wheat is coiled for a squeeze, with speculators freshly short into a Black Sea escalation that has damaged the port handling 40% of Russia's grain trade. And the scariest wildcard of all is one nobody's pricing: a dry, half-empty Europe still quietly takes 4.5 billion cubic feet a day of Russian gas, and if the Black Sea fight pulls in Turkey, Vladimir Putin can, as Doomberg warned, "throw a switch and your tanks are empty." The oil price spent this week arguing about who controls a strait. The bigger question, as ever, is who controls the fuel, and this week the answer kept moving further from Washington's hands.