Oil Extends Decline as Traders Weigh Trump’s Latest Iran Threats

Forget paper markets; physical shortages are biting (US retail, Asia petrochem). Hormuz is structurally impaired—the drone era makes a return to normal impossible. This forces a US policy pivot, likely tolerating Iranian oil flows. The trade is long gasoline into a massive summer squeeze. We see $6 national avg ($8-9 CA) as refiners chase jet fuel margins and SPR bleeds. Nasdaq highs are a dangerous head fake. The system will break, and prices will go vertical.

Yields

NDX

RUT

explicit

Metals

USD

gasoline up

Sankey Research 7.2
Investment Research Firm
Paul Sankey 7.0

Oil Extends Decline as Traders Weigh Trump’s Latest Iran Threats

WTI

wti

I don't think there's any doubts about $6 gallon this summer... nationwide average six.

4/23/2026 2:33:29 PM	short term sharp up	5 days later	+13.22%	+19.83%
4/3/2026 7:31:50 PM	short term sharp up	7 days later	-11.86%	-17.79%
3/10/2026 12:06:58 AM	medium term up	20 days later	+16.19%	+16.19%
12/22/2025 10:03:30 PM	short term cautious down	6 days later	-0.51%	+0.26%

Walmart and Costco warned they don't have enough motor oil (base oil) on shelves due to dependence on Strait of Hormuz supply.

Alexis
Paul Sankey

Physical shortages are real in the US and Pacific Rim; 40% of Asian petrochemical capacity is shut down.

Crisis management is working in Australia where inventories are higher than before the crisis. Mexico is booming ahead of the World Cup.
Asks if the Strait of Hormuz situation will ever return to normal.

John Tucker
Paul Sankey

The Strait of Hormuz will not return to normal; the oil industry will smuggle, and the US may turn a blind eye to Iranian oil sales. The Trump-Putin-China dynamic is a big deal for oil.

The US announcement allowing Russian oil sales signals a potential U-turn on Iran sanctions. Drones have fundamentally changed shipping security.
Questions whether more pipelines can solve the 20% dependency on Hormuz oil and gas.

John Tucker
Paul Sankey

Pipelines are a solution but tankers were never a problem before; the Houthis showed the vulnerability. The Suez Canal throughput is still at 50% of pre-Houthi levels after three years.

North America has 250,000 miles of pipelines vs 40,000 in the Middle East.
Asks for the gasoline price forecast.

Alexis
Paul Sankey

Predicts $6/gallon national average gasoline this summer, with California at $8-9. Berlin will go to $11-12.

Refiners are prioritizing jet fuel (record high inventories), reducing gasoline output into driving season. Octane (base oil alchemy) is short in California. The SPR is being drawn at over 1 million barrels per week.
Asks for a critique of the Caspian Sea region's importance.

Alexis
Paul Sankey

The Caspian Sea (Kazakhstan) has huge potential, with Chevron's Tengiz project at 1 million barrels/day. It sits strategically between Russia, China, and the US.

Non-OPEC oil will be developed massively. Argentina, Brazil, and Venezuela will grow their oil output, potentially making Hormuz less critical over time.
As a politician, $6 gas cannot be allowed to happen.

John Tucker
Paul Sankey

The US gasoline price will trigger a crisis response. The Nasdaq is at a record high, masking the real-world oil crisis. The US will eventually have to compete with international export sales, driving domestic prices vertical when operational inventory limits are hit.

We haven't hit the point where the system can't run, but we will, and prices will go nuts. The frog is boiling without blinking.

SignalTube

markets at a glance