Oil Market: Military Premium vs Signals of Buyer Fatigue
On Thursday, oil prices moved in different directions: after three sessions of confident growth that lifted Brent to five-week highs above $96, the market corrected down to $95 in the morning; however, by midday, buyers regained control—November Brent futures rose to $97, and WTI climbed to $92.50 per barrel. On Friday, the market opens with a continued high sensitivity to news headlines. Key drivers for prices include:
- Escalation of the Conflict: The USA targeted approximately 100 Iranian sites, including radar systems, maritime installations, and communication facilities; Tehran responded by striking American assets in the region and attacking commercial vessels.
- Limited Transit through Hormuz: Tanker traffic through the strait, which accounted for up to 20% of global maritime oil trade, has sharply reduced, and freight and insurance costs in the Persian Gulf remain extremely high.
- Confidence in Alternative Routes: Market participants hope that alternative pipeline and maritime delivery channels will partially compensate for the loss of volumes—this is what is preventing prices from spiking to $100.
- Risk of Sharp Correction: The higher the military premium rises, the more painful the correction may be if signals of de-escalation or negotiations arise.
Analysts see the baseline range for the upcoming sessions between $92–98 per barrel of Brent: support at $90 currently appears strong, while resistance will be at the psychological mark of $100.
Geopolitics: The Strait of Hormuz Remains the Epicenter of Energy Risk
The conflict between the USA and Iran has lasted for seven months, and the current phase is one of the most dangerous for the global energy market. Washington claims control over the waters, while Tehran asserts it will close the strait to commercial shipping. It is fundamentally important for the global FEC as the Strait of Hormuz is a conduit not only for Saudi, Iraqi, and Kuwaiti oil, but also Qatari LNG: the curtailment of nearly one-fifth of global liquefied gas supplies has already triggered a price shock in Europe and Asia.
Scenarios Factored into the Market
- A strike on Iran's export infrastructure, including Kharg Island, will add a few dollars in risk premium to oil prices.
- Freezing the conflict with limited transit will maintain prices in the upper range amid high volatility.
- A diplomatic breakthrough and resumption of shipping will lead to a quick drop in the premium and a correction of Brent to $85–90.
OPEC+: The September 6 Meeting as a Key Benchmark of the Week
Start from September, seven key OPEC+ countries—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—have increased their quotas by 188,000 barrels per day, completely exiting voluntary cuts of 1.65 million b/d. The total allowed production level has reached 36.2 million barrels per day, and further enhancements have been put on hold until the end of 2026, while the baseline restrictions of about 2 million b/d that have been in place since 2022 remain in effect. On Sunday, September 6, ministers will meet again: the market will seek answers on whether the alliance is willing to use spare capacity to compensate for the shortfall in Middle Eastern volumes. An additional intrigue involves quota redistribution following the UAE's exit from OPEC and OPEC+ in May 2026.
Gas Market: Europe Enters Winter with Record Low Stocks
The European gas market is experiencing the most strained start to autumn since the 2022-2023 crisis. October futures at the TTF hub are trading at around $880–895 per thousand cubic meters, having gained about 20% in July and surpassing the $800 mark for the first time in five months at the end of August. Traders are seriously discussing the possibility of testing the $1000 level. The fundamentals of the rally include:
- EU underground storage filling rates are only around 58%—historically low levels ahead of the heating season;
- Significant volumes of Qatari LNG are unavailable due to shipping restrictions through the Strait of Hormuz;
- Increased summer gas consumption by power plants due to heat and rising energy demand;
- Warnings from suppliers about risks to stable energy supply in the region this winter.
LNG: American Exports as a Balancer
Partially saving the market are new liquefaction facilities in the USA operating near record loading levels, along with declining demand in Asia: China reduced LNG imports by about 18% in August, and price-sensitive buyers, such as Pakistan, are opting out of expensive spot cargoes. However, there are no available volumes to fully compensate for the losses in the Middle East, maintaining high price volatility in the gas markets of Europe and Asia.
Electricity and Renewables: Data Centers Reshape Demand Landscape
Global electricity markets are adapting to expensive gas through renewable sources: where the share of renewables is higher, the dependence on imported fuel is felt less. A structural trend this year is the explosive growth in energy consumption by data centers and artificial intelligence infrastructure: global usage by data centers is now comparable to the energy balance of a large European country, while access to grid power is becoming a scarce asset. China is launching megaprojects for direct supplies of solar and wind generation to data center clusters, while in the USA, tech giants are contracting "green" electricity through long-term PPAs, and investments in grids and storage systems are becoming one of the main areas of capital investment in the sector.
Coal: A Safety Resource Amid the Gas Shock
The coal market is once again benefiting from the gas crisis. The switch from expensive gas to coal by power plants is observed both in Asia and in certain European countries, supporting prices for thermal coal and the loading of key exporters—Indonesia, Australia, Russia, and South Africa. China and India are maintaining high volumes of coal generation to meet peak loads: in the short term, coal remains an irreplaceable safety net for global energy markets, despite long-term decarbonization goals.
Russian Oil Products Market: Record AI-92 and Strict Regulation
The domestic fuel market in Russia remains under pressure. Exchange prices for AI-92 gasoline have reached a historical maximum, exceeding 75,000 rubles per ton; in some regions, local supply disruptions persist, although the situation in the capital region is gradually stabilizing. The government is responding with a set of measures:
- A total export ban on gasoline is in place until January 31, 2027, affecting both producers and traders;
- The export ban on diesel and marine fuel has been extended to September 30 for producers and until the end of January 2027 for other exporters;
- Since September 1, the sale of gasoline with ecological classes K2–K4 has been permitted to increase fuel availability in the regions;
- Shortfalls are being covered by imports from Belarus, Kazakhstan, India, and Turkey, along with accelerated refinery recovery and reduced turnaround times for planned repairs;
- The Federal Antimonopoly Service has intensified control over pricing at independent filling stations, and the damping mechanism continues to compensate oil producers for some lost revenue.
Key Investor Focus for Friday, September 4
- Dynamics of the USA-Iran Conflict—any signals regarding strikes on export infrastructure or, conversely, negotiations could move Brent by several dollars in either direction.
- Preparation for the OPEC+ Meeting on September 6—leaks regarding the positions of Saudi Arabia and Russia will set the direction for oil prices ahead of the meeting.
- Filling Rates of European UGS—these will determine whether TTF gas settles above $900 per thousand cubic meters.
- Transit through the Strait of Hormuz—the restoration of shipping will become the main deflationary factor for oil and LNG.
- The Russian Fuel Market—exchange prices for gasoline and the effects of targeted relaxations for diesel exports.
The baseline scenario for the end of the week is the continuation of elevated prices for oil and gas amid high volatility: the energy market continues to trade geopolitical factors rather than the balance of supply and demand, and ahead of the OPEC+ meeting on September 6, investors should brace for sharp intraday price movements.
