Oil Market: Brent Above $95 Amid Military Premium
Oil prices are experiencing a sharp increase. Brent futures closed Tuesday with an over 4.5% gain and continued to rise on Wednesday, trading in the range of $95–97 per barrel; American WTI has remained above $90. The market is pricing in the increasing risk of supply disruptions from the region responsible for approximately one-fifth of global maritime oil trade. Key drivers of prices include:
- Military Escalation: The U.S. has launched a series of strikes on targets in Iran, including attacks on two Iranian tankers; Tehran has responded with missile strikes on a U.S. base in Jordan and launches towards the UAE.
- Threat to Kharg Island: Washington is openly contemplating a strike on Iran's main oil export hub, which would directly impact crude supply.
- Shipping Paralysis: Transit through the Strait of Hormuz is estimated to have fallen to around 6 million barrels per day, down from levels that previously covered up to 20% of global supply.
- Insurance Premium: Attacks on commercial tankers, including Saudi and South Korean vessels, have sharply increased freight and insurance costs in the Persian Gulf.
Analysts note that as long as support around $90 per barrel holds, buyers retain control in the market; however, with each wave of increase, the risk of a sharp correction in the event of de-escalation also rises.
Geopolitics: The Strait of Hormuz as the Epicenter of Global Energy Risk
The conflict between the U.S. and Iran has been ongoing for about six months, but the current phase appears most perilous for the global FEC. Iran has announced the closure of the Strait of Hormuz to commercial shipping, while Washington insists it controls the waters. Simultaneously, the U.S. is consulting with Russia and China regarding sanctions pressure on Tehran. It is critically important for the global market that the strait facilitates not only oil from Saudi Arabia, Iraq, Kuwait, and the UAE but also Qatari LNG—a temporary loss of nearly 20% of the world’s liquefied gas supply has already provoked a price shock in gas markets across Europe and Asia. Any scenario—from a blockade to a strike on Iran’s export infrastructure—could add several dollars in risk premium to prices.
OPEC+: Ending the Production Increase Cycle and a Pause Until Year-End
Amidst the geopolitical storm, the exporters' alliance is adhering to its previously established plan. As of September, seven key OPEC+ countries—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—have increased quotas by 188,000 barrels per day, fully completing 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 have been put on hold until the end of 2026; meanwhile, basic restrictions of about 2 million b/d, effective since 2022, remain in place. The next ministerial meeting is scheduled for September 6, and the market will closely monitor whether the alliance will respond to the Middle Eastern premium and the falling volumes of Iranian exports. A separate point of intrigue remains the redistribution of quotas following the UAE's exit from OPEC and OPEC+ in May 2026.
Gas Market: Europe Delays on Stocks, TTF Approaching $1000
The European gas market is experiencing its most strained start to autumn in recent years. October futures at the TTF hub are trading around $880–895 per thousand cubic meters, having gained about 2% since the beginning of the week—prices exceeded $800 for the first time in five months at the end of August, and the market is now seriously discussing a move towards $1000. The reasons for the price rally include:
- Significant volumes of LNG from Qatar and the UAE have been sidelined due to shipping restrictions through the Strait of Hormuz.
- Historically low levels of stocks in European underground gas storage ahead of the heating season.
- Increased gas consumption by power plants during the summer due to heat and rising energy demand.
- Competition for spot LNG cargoes, only partially mitigated by reduced purchases from China and refusals from price-sensitive buyers like Pakistan.
LNG: U.S. Exports as a Market Insurance
New liquefaction capacities in North America are providing a balancing factor: the Golden Pass and Plaquemines projects are ramping up production, and LNG exports from the U.S. are holding near record levels. Nonetheless, there are limited free volumes available to quickly offset losses from the Middle East, maintaining high price volatility in Europe and Asia.
Electricity and Renewable Energy: Renewable Generation Alleviates the Shock
Global electricity markets are adapting to gas shortages. According to industry analysts, the ongoing commissioning of solar and wind capacities has been a key factor in diversifying energy supply and mitigating the effects of the gas shock: where the share of renewables is higher, dependence on expensive imported fuel is less pronounced. At the same time, rising gas prices are prompting a switch back to coal in several Asian and European countries. An additional structural trend is the rapid growth in electricity demand from data centres and artificial intelligence infrastructure: in the U.S., energy systems are revising load forecasts, and access to network capacity is becoming a scarce commodity, enhancing the investment appeal of generation and grid companies.
Coal: Demand Supported by Expensive Gas
The coal market has once again benefited from the gas crisis. The switch from expensive gas to coal for power plants is being observed in both Asia and several European countries, supporting prices for thermal coal and the load for exporters—Indonesia, Australia, Russia, and South Africa. China and India continue to maintain high volumes of coal generation to meet peak loads, and in the short term, coal remains a backup resource for the global energy sector, despite long-term decarbonisation goals.
Russian Oil Products Market: Export Restrictions and Targeted Easing
Within the domestic framework of the Russian FEC, a strict regulatory regime continues to operate. The complete ban on gasoline exports has been extended until January 31, 2027, applying to both producers and traders. However, as of September 1, restrictions on diesel fuel, marine fuels, and gas oils have been eased—exporting is once again permitted for direct producers, which reduces the risk of overstocking at refineries and falling processing volumes. Additional measures include:
- Increased quotas for fuel sales on the exchanges to ensure the domestic market;
- Control by the Federal Antimonopoly Service over speculative resale of oil products;
- A damping mechanism to compensate oil producers for part of the loss in export revenues.
Fuel stocks in the country are comparable to last year's levels, and the situation in regions that experienced disruptions in the spring is gradually normalizing—however, the autumn maintenance 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 seen in months. Investors and market participants should monitor:
- Dynamics of the U.S.-Iran Conflict—any signals of an attack on Kharg Island or, conversely, negotiations could shift Brent by several dollars in either direction.
- Shipping through the Strait of Hormuz—restoration of transit will be the main deflationary factor for oil and LNG.
- OPEC+ Meeting on September 6—the alliance's response to falling volumes and the price rally.
- Filling Rates of European Underground Gas Storage—it will determine whether gas prices will hold above $900 per thousand cubic meters.
- The Russian Fuel Market—the effect of the partial reopening of diesel exports and exchange prices for gasoline.
The baseline scenario for the coming days anticipates continued high volatility amid elevated prices for oil and gas: the energy market is once again trading not on the balance of supply and demand, but on geopolitics.
