Geopolitical Tensions Rising

Wednesday, January 8, 2026. WEEK 2 MIDWEEK UPDATE. WTI crude oil settled at $57.76, up $1.77 or 3.2%. Sharp rebound after two consecutive days of declines. Two-week high. Brent up 3.4% to $61.99. KEY DRIVERS: US actions on Venezuela's oil sector following reported capture of former leader Nicolas Maduro. Energy Secretary Chris Wright announced US oversight of Venezuelan crude sales. Intensified sanctions including seizure of Venezuela-linked oil tankers (one reportedly under Russian flag). Geopolitical tensions/supply concerns involving Russia, Iraq, Iran. President Donald Trump warning to Iran regarding protests/potential crackdowns. Broader reassessment of geopolitical shifts in Americas/Middle East. NATURAL GAS: Henry Hub spot price ~$2.92/MMBtu Jan 8, 2026. Low $3 range or below around that time (below $3 Jan 9). Note will spike sharply later month due to Arctic blast (all-time highs near $28-$30/MMBtu around Jan 23-26). IRAN/STRAIT OF HORMUZ: Strait remains open with normal shipping traffic but geopolitical tensions rising sharply. Internal Iranian unrest, US warnings of potential military intervention. Market concerns over possible future disruptions to crude oil flows (normally ~20-25% global seaborne oil trade). PRE-CONFLICT BUILDUP: Iranian protests erupted late Dec 2025, intensified Jan 2026 after brutal crackdown. US threatened intervention, raising fears escalation could prompt Iran to threaten/close Strait. MARKET WARNINGS: Jan 12, 2026 report highlighted Strait returning to focus amid possible US action against Iran. Experts cautioning confrontation could lead Tehran to disrupt chokepoint. OIL PRICE OUTLOOK: BloombergNEF analysis projected Brent averaging $55/bbl for 2026 (assuming no major Iran-related disruptions) but noted risks of prices reaching $91/bbl in disruption scenario. POLYMARKET BETTING: Contracts on whether Iran would close/restrict Strait by Jan 31, 2026 resolved to No (reflecting no closure occurred in month despite tensions). BROADER FLOWS: EIA data showed Strait of Hormuz crude/condensate flows averaging ~20-21M bpd in prior periods; no Jan 2026 specific drop reported. THE SETUP: Crude Venezuela focus, Iran tensions rising, geopolitical premium building. Support $55, resistance $60. Gas $2.92/MMBtu, Arctic blast coming late month, expect volatility. WEEK 2 THESIS: Crude geopolitical premium building, Venezuela sanctions, Iran tensions. Watch for Strait escalation risk. Support $55, resistance $60. Gas expect volatility, Arctic blast late month, heating demand coming. Trade the data, not the headlines. TEAM NOTE: Energy Markets Daily team taking break this week and next. Usual daily cadence will return soon. Thank you for attention and support.