Oil Market: Brent Above $95 Amid Military Premium
Oil prices are showing a rapid increase. Brent futures closed Tuesday up more than 4.5% and continued to rise on Wednesday, trading in the range of $95–97 per barrel; US WTI stabilized above $90. The market is pricing in the growing risk of supply disruptions from a region that accounts for about a fifth of global maritime oil trade. Key price drivers include:
- Military Escalation: The US launched a series of strikes on targets in Iran, including attacks on two Iranian tankers; Tehran responded with missile strikes on a US base in Jordan and launches towards the UAE.
- Threat to Kharg Island: Washington openly acknowledges the possibility of striking Iran’s main export oil hub, which would directly affect crude supply.
- Paralysis of Shipping: Transit through the Strait of Hormuz is estimated to have dropped to about 6 million barrels per day compared to previous volumes that covered up to 20% of global supplies.
- Insurance Premium: Attacks on commercial tankers, including Saudi and South Korean vessels, have sharply raised freight and insurance costs in the Persian Gulf.
Analysts note: as long as support remains near $90 per barrel, buyers retain control of the market; however, with each wave of increases, the risk of sharp corrections rises in the event of de-escalation.
Geopolitics: The Strait of Hormuz as the Epicenter of Global Energy Risk
The conflict between the US and Iran has been ongoing for about six months, but the current phase appears most dangerous for the global FEC. Iran claims to have closed the Strait of Hormuz to commercial shipping, while Washington insists it controls the waters. Simultaneously, the US is consulting with Russia and China on sanctions pressure on Tehran. It is crucial for the global market that the strait is not only a transit route for oil from Saudi Arabia, Iraq, Kuwait, and the UAE but also for Qatari LNG—a temporary loss of nearly 20% of global liquefied gas supply has already triggered a price shock at gas hubs in Europe and Asia. Any scenario—from blockade to strikes on Iranian export infrastructure—could add several dollars to risk premiums in pricing.
OPEC+: Concluding the Cycle of Production Increases and a Pause Until Year-End
Amid the geopolitical storm, the alliance of exporters is sticking to its previously approved plan. Since September, seven key OPEC+ countries—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—have increased quotas by 188,000 barrels per day, fully concluding the exit from voluntary cuts of 1.65 million b/d. The total allowed production level has reached 36.2 million barrels per day. Further increases are paused until the end of 2026; meanwhile, the basic restrictions of around 2 million b/d, in place since 2022, remain. The next ministerial meeting is scheduled for September 6—markets will be closely monitoring whether the alliance reacts to the Middle Eastern premium and the falling volumes of Iranian exports. A separate intrigue remains the redistribution of quotas after the UAE's exit from OPEC and OPEC+ in May 2026.
Gas Market: Europe Lagging on Reserves, TTF Approaching $1000
The European gas market is experiencing the most tense start to autumn in recent years. October futures at the TTF hub are trading around $880–895 per thousand cubic meters, increasing by about 2% since the beginning of the week—at the end of August, prices surpassed $800 for the first time in five months, and now the market is seriously discussing movement toward $1000. Reasons for the price rally include:
- The loss of significant LNG volumes from Qatar and the UAE due to shipping restrictions through the Strait of Hormuz.
- Historically low levels of gas in European UGS ahead of the heating season.
- Increased gas consumption by power plants during the summer amid heat and rising energy demand.
- Competition for spot LNG cargoes, only partially mitigated by reduced purchases from China and rejections from price-sensitive buyers like Pakistan.
LNG: US Exports as a Market Insurance
New liquefaction capacities in North America are a balancing factor: the Golden Pass and Plaquemines projects are ramping up production, and LNG exports from the US are holding near record levels. However, there are few available volumes for rapid compensation of Middle Eastern losses, which maintains high price volatility in Europe and Asia.
Electric Power and Renewable Energy: Renewable Generation Mitigates the Shock
The global electricity sector is adapting to gas shortages. According to industry analysts, the ongoing introduction of solar and wind capacities has become a key factor in diversifying energy supply and mitigating the impacts of the gas shock: where the share of renewables is higher, the dependence on expensive imported fuels is felt less acutely. At the same time, rising gas prices are provoking a shift back to coal in several countries in Asia and Europe. A separate structural trend is the rapid increase in electricity demand from data centers and artificial intelligence infrastructure: in the US, energy systems are revising load forecasts, and access to grid capacity is becoming a scarce asset, enhancing the investment attractiveness of generation and utility companies.
Coal: Demand Supported by Expensive Gas
The coal market has once again become a beneficiary of the gas crisis. Switching power plants from expensive gas to coal is observed in both Asia and certain European countries, supporting prices for thermal coal and the load for exporters—Indonesia, Australia, Russia, and South Africa. China and India maintain high volumes of coal generation to cover peak loads, and in the short term, coal remains a fallback resource for global energy, despite long-term decarbonization goals.
Russian Oil Products Market: Export Restrictions and Selective Easing
The internal framework of the Russian FEC continues to operate under a strict regulatory regime. A complete ban on gasoline exports has been extended until January 31, 2027, applying to both producers and traders. However, from September 1, restrictions on diesel fuel, marine fuel, and gas oils have been eased—export is again permitted for direct producers, reducing the risk of oversupply for refineries and declining processing volumes. Measures include:
- Increased norms for auctioning fuel sales to ensure the domestic market;
- Control by the Federal Antimonopoly Service over speculative resales of oil products;
- A damping mechanism that compensates oil producers for part of the lost export revenues.
Fuel stocks in the country are comparable to last year’s levels, and the situation in regions where there were spring disruptions is gradually normalizing—however, the autumn repair season for refineries requires regulators to remain vigilant.
What This Means for Investors: Key Indicators as of September 3
The FEC market enters Thursday with the highest geopolitical premium in months. Investors and market participants should monitor:
- The Dynamics of the US-Iran Conflict—any signals of a strike on Kharg Island or, conversely, talks can move Brent by several dollars in either direction.
- Shipping Through the Strait of Hormuz—the restoration of transit will be the main deflationary factor for oil and LNG.
- The OPEC+ Meeting on September 6—the alliance's reaction to falling volumes and the price rally.
- The Filling Rates of European UGS—this will determine whether gas remains above $900 per thousand cubic meters.
- The Russian Fuel Market—the effects of the partial opening of diesel exports and auction quotes for gasoline.
The base scenario for the coming days is the maintenance of high volatility with elevated prices for oil and gas: the energy market is once again trading geopolitical factors rather than balancing supply and demand.
