Oil Is Political, And Probably Always Will Be...
Key Extract
Oil prices don't move on supply, demand, and inventories alone. Peace talks, sanctions, blockades, elections, and control of key shipping routes are shaping crude and diesel markets in real time.
It would be nice to look at supply, demand and inventories and invest from there.
Oil doesn't work that way.
It's one of the most politically sensitive commodities in the world. Governments set blockades, sanctions, export bans and ceasefire terms, and each of those decisions moves the price.
This week is a classic example. Let's break it down briefly.
THE PEACE TALKS
At the UN last week, Iran handed US envoys a seven-day plan. The US would lift its naval blockade, waive sanctions on Iranian oil, and observe a ceasefire that includes Lebanon. In return, Iran would reopen the Strait of Hormuz on day six. (CBS)
On Saturday, President Trump rejected it. On Sunday, he said he expects talks to resume this week. (Axios)
Both sides are watching the calendar. Iran's president says Tehran wants a deal before the November midterms. Trump says Iran is waiting until after. (CBS)
With the election five weeks out, we find it hard to see anything solidify before then.
Why?
High fuel prices create domestic pressure on whoever is in office. That pressure is leverage for whoever controls barrels or the routes they travel through. Iran has Hormuz. The Houthis have now shut the Bab el-Mandeb to Saudi-flagged tankers. (CBS)
For a deeper analysis on those, check out our focus on Hormuz and the Red Sea.
The closer the election gets, the more that leverage is worth. That's the reason we think neither side has much incentive to settle early. Everyday people everywhere take the damage, sadly. But the good news is that investors don't have to be the victim. More on this in a second, but first, here's the situation on the ground now:
THE NUMBERS
| Category | Value | Details | Change |
|---|---|---|---|
| U.S. diesel (retail) | $6.53 | per gallon, Sept 21 | +24 cents on the week; +$2.78 vs. a year ago |
| WTI crude | $92.41 | per barrel, Sept 25 settle | -$7.89 on the week; down 7.9% |
| Brent crude | $104.32 | per barrel, Sept 25 settle | +$0.45 on the week; about $12 over WTI |
Source: EIA Gasoline and Diesel Fuel Update; NYMEX WTI and ICE Brent front-month settlements, Sept. 25, 2026.
| Date | Price per gallon |
|---|---|
| Aug 31 | $5.60 |
| Sept 7 | $5.97 |
| Sept 14 | $6.29 |
| Sept 21 | $6.53 |
Source: EIA Gasoline and Diesel Fuel Update.
Diesel is up three weeks straight to $6.53 a gallon, $2.78 above a year ago. (EIA)
WTI fell almost 8% last week to $92.41 on deal hopes. Brent held at $104.32. (EnergyNow)
Once the rejection came through, Brent was back above $107 on Monday morning. (The National)
Plus, winter natural gas pricing is in the works. We'll do a deeper dive on that in a couple of weeks, but just know that this is when gas for heating and power is almost non-negotiable.
Internally, we are working on some exciting developments on the gas side, which wasn't factored into our projections working on our current field. To avoid being a victim in these chaotic times and markets, own something tangible.
TWO SCENARIOS
Direct oil and gas well ownership gives investors exposure to two different things.
One is volatility. Political shocks like this one can push prices well above plan for stretches of time.
The other is a longer uptrend in oil.
Those don't always happen together, and a well can participate in either one.
Volatility also runs the other way. We underwrite our projects at $70 oil, not at whatever this week's headline says.
So buckle up, more volatility ahead is for certain...