You’ve seen the headlines. The U.S. & Israel strikes Iran and Iran’s threat to close the Strait of Hormuz have created global commodity market uncertainty.

In simple terms:

• Roughly 20% – 30% of the world’s oil flows through that narrow waterway.
• 20% of global LNG (liquefied natural gas) also passes through it.
• Even if the U.S. produces much of its own oil and gas, energy prices are set globally.

When traders see risk, prices move quickly.

What We’ve Seen So Far

• Oil prices has jumped 7-8% in  Monday’s trading.
• Natural gas prices in Europe has jumped 45% on Monday.
• U.S. natural gas futures firmed up 7-8%.
• Electric  wholesale markets in the PJM region will mostly follow gas prices higher.

Nothing has “broken” yet — but markets are pricing in much more delivery risk.  There has not yet been a total supply collapse.  However, tankers fear moving through the Strait of Hormuz and tanker insurers have told the tankers to do so at their own financial risk.

Traders don’t price in the worst-case scenario immediately.  They will be looking for answers:

• Are tankers actually halted?
• Are cargoes cancelled?
• Is production shut in?
• Are insurance rates spiking?
• Are ports closed?

What This Means for Ohio Businesses

In everyday terms:

•  Higher oil prices can lift gasoline and diesel costs.
• Higher  LNG prices overseas can pull more U.S. natural gas exports.
• That  can tighten U.S. gas supply pushing up prices.
• And  since gas fuels much of PJM’s power generation, electric wholesale prices follow gas.

Higher wholesale natural gas prices was already the forecast for the second half of 2026 — even before this conflict. The war simply adds more uncertainty to an already tightening supply/demand balance.

There is some clarity on the capacity side.

PJM Interconnection has agreed to keep the capacity cap at $325/MW-day for:

•  June   2028–2029

• June   2029–2030

The price cap provides a ceiling — but it is still historically elevated compared to pre-2025 levels.  PJM capacity prices are up over 1000% from 2024.  Capacity costs are now a significant portion of overall electric bills, and that is not likely to reverse anytime soon.  If you don’t understand what capacity is and it’s effect on your electric bills, please let us know and we can help explain it in greater detail.

Broader Supply Chain Considerations from the war with Iran

If the Strait were to close for any extended period and for all practical purposes it has:

• Oil shipping costs rise.
• Marine insurance costs spike.
• Freight costs increase.
• Plastics, chemicals, packaging and manufactured goods may see cost pressure.

Even companies not directly tied to energy can feel ripple effects.  Shipments will need diverted to much longer and costlier routes increasing the time to receive the shipments and the cost.

Our Commitment to You

Our job is to:

•  Monitor  wholesale electric and natural gas markets daily.
• Track  PJM capacity developments.
• Watch LNG export flows and storage levels.
• Alert you when timing opportunities arise.
• Continue exploring Peak Load Management and Demand Response where appropriate.

You shouldn’t have to watch global geopolitics to manage your energy budget. That’s what we’re here for.  If you have questions about your specific contracts or future renewals, just call or email.

We’re watching this closely.