An Unexpected Rally
February 23, 2026
Written By Tim Danze
NOTE: Recent events in Iran have significantly altered the original story planned here. This update attempts to assess current events quickly and make sense of the market dynamics that have shifted dramatically.
If bombs are dropping and shipping through the Strait of Hormuz is halted, prices will find strong support and risk moving even higher. Fear drives these events, and the headlines surrounding them continue to attract buyers into the market.
The situation in Iran has accelerated the seasonal cycle. The market was trending lower in February, but as Iran tensions began to surface, prices flattened. That equilibrium proved temporary. The growing buzz around Iran eventually overwhelmed the market, and prices began moving higher as fear-driven headlines drew in more buyers.
When the conflict started, the seasonal cycle provided additional tailwind, and prices jumped as escalating tensions dominated daily reporting. Historically, prices trend higher into the fall, and much of that expected rally along with its price targets has already been realized. So where do we go from here?
If the Strait of Hormuz remains blocked and the war continues, prices are supported at current levels or higher. If the conflict drags on and Middle Eastern producers are forced to shut down because they can’t move crude, a price spike becomes a real possibility. Price targets are being thrown around freely in the media. $150, $180, take your pick.
This rally is underpinned by massive uncertainty, and markets hate uncertainty. Is the market overdone? Most likely, yes. But if more countries are drawn into the conflict, prices can go higher. If Middle Eastern producers are forced offline, prices can go higher still. That said, a substantial risk premium has been priced in over a very short period of time, and it’s always worth remembering: the higher it goes, the farther it can fall.
The following is the original market commentary, written prior to the war breaking out in Iran.
As we closed out 2025, a large majority of major investment banks and traders held a bearish outlook for energy products in 2026. Global inventories were elevated, the economic outlook was cloudy and uncertain, and many leaned negative given the potential implications of tariffs, sanctions and other economic headwinds.
For anyone looking to lock in fuel prices for the upcoming year, there was little reason to act aggressively. Prices were trending downward as President Trump pushed for lower energy costs, and bearish projections dominated the market. The prevailing consensus anticipated an oil surplus through the first quarter of 2026, with most outlooks forecasting flat to lower prices for calendar year 2026.
How the Year Ended
Here’s a quick review of year-end pricing action:
WTI Crude Oil hit a low of $55 per barrel on Dec. 16, 2025. Prices traded in a $55 to $58 range for approximately one month before gradually working higher.
Gasoline followed a similar pattern, bottoming at $1.6798 on Dec. 17, 2025, then trading between $1.68 and $1.78 for roughly a month. Gasoline prices have gradually moved higher.
Ultra-low sulfur diesel (ULSD) behaved slightly differently, reaching a low of $2.0463 on Jan. 7, 2026, before beginning a gradual climb. ULSD found more support than other products due to lower inventories, steady demand and expectations for cold weather to bolster consumption.
What Changed
Uncertainty in the Middle East, ongoing tensions between Russia and Ukraine, and now escalating issues with Iran have provided price support. Traders grew increasingly concerned about geopolitical risks and built a risk premium into the market. It’s fair to say these markets have now entered their typical seasonal advance.
Looking Ahead
With that context in mind, here’s my outlook: I believe prices initially rallied on geopolitical concerns and are now also following their normal seasonal pattern, which should push prices higher into late April or mid-May. If you have near-term exposure, use any price pullbacks as opportunities to secure protection for the short term. The seasonal advance should support prices through late April to early May.
If the market follows historical patterns, the usual seasonal advance typically pulls back in June. A June correction would present an opportunity to purchase price protection for the fall harvest and the first part of the 2027 season.
Contracting Options
In volatile markets like these, fuel contracting provides a valuable tool for managing price risk and bringing clarity to your budgeting process. MFA Oil offers fuel contracting year-round for up to 12 months, allowing you to lock in pricing on a set number of gallons based on your operational needs.
The process is straightforward: Specify your fuel type and volume, then choose the delivery method that works best for your operation. You can contract for tankwagon delivery to your farm or business, transport truck for larger volumes, or fill-ups at nearby Petro-Card 24 fueling stations.
MFA Oil offers two contracting options to fit different risk management strategies:
Fixed Price Contracts allow you to lock in a specific price per gallon for the contract duration, guaranteeing your cost and enabling precise expense forecasting.
Maximum Price Contracts provide downside protection with upside flexibility. For a nominal fee, you establish a price ceiling that your cost will not exceed, while retaining the ability to benefit if fuel prices decline during the contract period.
Given the current market environment, where geopolitical uncertainty could drive prices higher, now is an ideal time to evaluate your fuel contracting strategy for the months ahead.