Renewed tensions in the Iranian-U.S. war resulting from Iranian strikes on U.S. vessels in the Strait of Hormuz and retaliating strikes on Iranian assets have exacerbated crude-oil pricing. As of this writing, WTI is priced at $93.35/barrel and Brent is at $98.27/barrel.
Iran has, as of this writing, announced an exclusive restricted zone around the Strait of Hormuz and a new shipping corridor with Oman as it seeks greater control over the key waterway.
The proposed zone would stretch from an area near the Gulf of Oman and the Arabian Sea, through the Strait of Hormuz and into the Gulf waters to the north.
Mohsen Resale, secretary of Iran’s Supreme National Security Council, says: “From now on, if ships are moving on the western or eastern side of the Strait of Hormuz, but stop or commit a violation, they will be put on the sanctions list. The Strait of Hormuz will become a sanctions zone.”
The U.S. response has not been announced as of this writing.
Chevron Corp. has entered into a joint venture with Venezuela Petroindependencia SA, of which Chevron holds a 49% interest. The venture has been assigned rights to develop the adjacent Carabobo 1 and 2 South Areas in the Orinoco Belt. Chevron plans to invest more than $7 billion over the next five years and more than double production to about 600,000 barrels/day from 2026 levels.
Venezuelan crude is heavy and sour, chemically close to Persian Gulf grades that have become scarce, and the refineries in Texas and Louisiana were substantially built to process exactly that kind of crude. Venezuela is close to being an answer to easing the supply deficit of Persian crude.
Fuel markets feel the squeeze
The hostilities in the Gulf are not the only factor contributing to the rise in diesel and gasoline prices.
According to the Energy Information Administration, refineries at the end of August ran at 98% of capacity. Midwest refiners operated at 103.5% above their nameplate ratings.
The fact is that refiners ran harder and got less of the fuel the country needs. It’s why running the plants harder has stopped being the answer to the supply-and-demand pressure.
Refining executives were summoned to the White House and pressured to expand capacity. Their reason for not expanding is cost and lead time.
In addition, a new refinery is a multi-billion-dollar, multi-year project, and the industry prefers to expand and modernize existing plants it already owns. Refiners do not believe margins will remain at levels sufficient to pay for a multi-decade asset.
No one funds a 40-year plant if it gets regulatory approval against a spread they cannot price past next winter. The capacity stays unbuilt whether the shortage lasts two years or 10.
Nobody is building the cure.
Construction shifts toward power and data centers
Total construction spending fell in July by 0.5%, according to data released by the U.S. Census Bureau. On a yearly basis, spending was down 3.8%.
The residential sector saw the largest decline, down 1.3% from June, while nonresidential spending increased 0.1%.
The increase in nonresidential spending that occurred in July was entirely due to data centers, according to Anirban Basu, chief economist at Associated Builders and Contractors.
Spending in the power sector increased 5.3% annually, predicated on increased demand for electricity from data centers.
• Pipeline and data center construction
Phillips 66, along with its joint-venture partners, has reached a final investment decision on the $4.4+ billion Western Gateway pipeline.
The proposed network from Phillips 66 and its partners would be able to transport at least 200,000 barrels/day of refined products from St. Louis to the Pacific Coast by way of Arizona and California.
Some 900 miles of 20-inch- and 24-inch-diameter pipeline are to be constructed from Borger, Texas, to Phoenix, Arizona, where it will be tapped into broader networks operated by Kinder Morgan. Phillips 66 will construct and operate the pipeline. Construction should be completed by the end of the decade.
Digital Realty Trust is expected to invest an estimated $2.7 billion in initial work at its new campus in Taylorsville, Georgia, early next year. This is for only one building; the entire project could encompass 12 buildings and an investment exceeding $28.7 billion.
Carbon steel supply tightens
Demand for carbon steel piping products has reached levels not experienced in decades. As a result, manufacturers continue to extend lead times as production capacity struggles to keep pace with incoming orders. In several product categories, deliveries are now extending into 2027.
Offshore producers and suppliers of seamless carbon steel pipe continue extending delivery schedules into late 2027 and, in some cases, into 2028. Global supply chain disruptions remain a contributing factor.
Container availability remains inconsistent, while ocean freight costs continue to trend upward. These developments are contributing to firmer offshore PVF pricing and increasing concerns regarding product availability.
Reports of shortages involving carbon steel fittings, flanges and other critical PVF components continue to emerge across multiple market sectors.
Domestic carbon steel flange pricing has increased since the previous issue, reflecting strong demand and rising manufacturing costs. Pricing for domestic carbon steel butt-welding fittings has remained relatively stable; however, market participants continue to anticipate additional increases should raw material costs, freight expenses or supply constraints intensify.
In today’s environment, proactive communication throughout the supply chain has become increasingly important. Maintaining close coordination among project owners, engineering firms, contractors, distributors, suppliers and manufacturers is essential for successfully managing procurement schedules and project timelines.
Early material planning, strategic purchasing decisions and realistic scheduling assumptions will remain critical to delivering projects on time and within budget.
Workforce development remains a top priority
The PVF Roundtable continues to recognize the urgent need to develop and sustain a highly skilled workforce capable of meeting the demands of the construction, manufacturing and PVF industries.
Workforce development remains one of the industry’s highest priorities and requires the continued support of manufacturers, contractors, distributors, engineering firms, educational institutions and end users.
Contractors, fabricators, engineering firms, pipeline operators, manufacturers and service providers are encouraged to partner with the PVF Roundtable to help attract and develop the next generation of industry professionals.
The PVFRT Charitable Foundation, a 501(c)(3) organization established by the PVF Roundtable, remains committed to supporting education and workforce development. Through scholarship programs focused on PVF-related trade education and technical training, it has awarded nearly $3 million in scholarships.
Funding for these programs is generated primarily through the PVF Roundtable’s Annual Golf Tournament and Annual TroutBlast, both of which continue to receive outstanding industry support.
Networking at the PVF Roundtable
The next PVF Roundtable networking meeting and Casino Christmas Party will be held December 8, 2026, beginning at 4:30 p.m., at Houston’s Bayou City Event Center.
The highly popular Casino Christmas Party is a celebration of the PVF Roundtable’s work and a fundraiser for Toys for Tots. Please bring a gift or make a donation.
The PVF Roundtable continues to serve as one of the industry’s premier forums for networking, education, workforce development and advocacy.
As market conditions become increasingly complex, opportunities to exchange information, strengthen relationships and discuss industry trends become even more valuable.
In an era defined by rapid technological advancement, workforce challenges, supply chain uncertainty and evolving market dynamics, industry networking remains one of the most effective ways to stay informed and maintain a competitive advantage.
The PVF Roundtable remains committed to fostering these relationships and supporting the continued growth and success of the PVF industry.
