Iran’s Actions Continue to Spike Oil Prices

Iran Escalation Puts Critical Gulf Energy Hubs at Risk
Energy markets jumped after Iran threatened direct retaliation against specific Gulf infrastructure, including Qatar’s Ras Laffan, Saudi Arabia’s Jubail and Samref facilities and the UAE’s Al Hosn gas field, following strikes on its South Pars gas operations. This marks a shift from indirect conflict to potential direct targeting of major processing and export hubs.

Early impacts are already visible: Saudi Aramco has begun evacuations, shipping through the Strait of Hormuz has slowed sharply, and LNG flows from Qatar are being disrupted. With key nodes of global supply now in the crosshairs, not just production but refining and export capacity, the risk is a more immediate and concentrated supply shock that could tighten global energy markets faster than previous disruptions.

U.S. Inventory Build Masks Tight Global Oil Market
U.S. crude inventories rose by 6.2 million barrels last week to 449.3 million, but remain slightly below the five-year average. Despite the build, oil prices continue to climb as global supply tightens, driven by disrupted tanker traffic through the Strait of Hormuz and outages across key producers like Iraq, the UAE and Saudi Arabia. Meanwhile, gasoline and distillate inventories declined, and U.S. demand remains strong, signaling that underlying market conditions are still tight. The result: rising prices despite higher U.S. stockpiles, highlighting ongoing global supply strain.

U.S. May Pay $1B to Exit Offshore Wind Projects
The Trump administration is reportedly considering a payout of more than $928 million (nearly $1 billion) to compensate TotalEnergies for canceling two offshore wind leases off New York and North Carolina. The move would mark a major rollback of Biden-era clean energy initiatives, effectively scrapping projects that were once central to U.S. offshore wind expansion. In exchange, TotalEnergies would shift its investment toward U.S. natural gas infrastructure. The proposed settlement highlights a broader shift away from offshore wind, as rising policy risk and economic concerns have already led to billions in canceled or reduced clean energy investments.

Energy Market Perspective

Supply Shock Reinforces Structural Tightness in Oil Markets
Oil markets remain highly volatile. Supply disruption is driving sustained upward pressure on prices. The closure of the Strait of Hormuz has removed an estimated 14.5 million barrels per day from global markets, with limited ability to offset the shortfall despite Strategic Petroleum Reserve (SPR) releases and incremental supply from non-Gulf producers.

While prices briefly pulled back from recent highs, they rebounded quickly, highlighting how sensitive markets are to ongoing geopolitical risk. Forward curves are also elevated, signaling expectations for prolonged tightness rather than a short-term spike.

For RIAs and family offices. This is not a cyclical move. This is a supply-constrained environment with limited near-term relief. With inventories unlikely to fully bridge the gap and demand destruction requiring significantly higher prices, oil markets appear positioned for continued strength and volatility, reinforcing the value of exposure to disciplined energy investments.

Ask the "Tax Guy"

Most investors focus on returns, but the real edge in oil and gas often comes from the tax strategy. We asked our EVP of Tax, Rex Gifford, to walk us through a key concept every investor should understand.

Q. How does investing in oil and gas working interests help reduce current taxes, and how can reinvesting over time enhance long-term benefits?

A: By acquiring working interest in oil and gas wells, two specific income tax deductions may be claimed as the oil and gas wells are drilled, tested, completed, stimulated and equipped. These two deductions are intangible drilling costs (“IDCs”), {IRC Section 263(c)} and bonus depreciation {IRC 168(k)} which allows 100% of tangible costs to be expensed. These two deductions accelerate current year deductions which may be claimed to reduce taxable income. The tax savings achieved reduce the cost of investment of acquiring the working interest, thus resulting in a lower “Net Cost” of investment.

Based on an income tax mitigation strategy extended over the long term, the value of the acquisition of the working interest may result in significant accumulation of wealth due to the income stream generated by the sale of oil and gas by the producing wells, combined with the increase in value of the working interest. This consistent deferral of the amount of the annual income tax liability will result in the desired goal of the accumulation of wealth.

Have a tax question you’d like covered in a future issue? Email it to theupside@kingoperating.com.

DISCLOSURE: For educational purposes only. Not tax, legal or accounting advice. Please consult your tax professional before making any investment or tax-related decisions.

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