Oil Market: Military Premium Versus Signs of Buyer Fatigue
On Thursday, oil prices exhibited mixed movements: after three sessions of sustained growth that lifted Brent to five-week highs above $96, the market corrected to $95 in the morning. However, by midday, buyers regained control, with November Brent futures rising towards $97 and WTI reaching $92.5 per barrel. On Friday, the market opens with heightened sensitivity to news headlines. Key price drivers include:
- Escalation of Conflict: The USA has struck approximately 100 Iranian targets, including radar systems, maritime facilities, and communication sites; Tehran has retaliated by attacking US assets in the region and targeting commercial vessels.
- Limited Transit Through Hormuz: Tanker movement through the strait, which accounted for up to 20% of global maritime oil trade, has sharply declined, and freight and insurance costs in the Persian Gulf remain exceptionally high.
- Bet on Alternate Routes: Market participants hope that alternative pipeline and maritime supply channels will partially compensate for lost volumes—this is restraining prices from breaching $100.
- Risk of Sharp Correction: The higher the military premium rises, the more painful the pullback could be if there are signals for de-escalation or negotiations.
Analysts see the base range for the upcoming sessions between $92 and $98 per barrel for Brent, with support at $90 appearing robust, while resistance is found at the psychological level of $100.
Geopolitics: The Strait of Hormuz Remains the Epicentre of Energy Risk
The conflict between the USA and Iran has now entered its seventh month, and the current phase is one of the most perilous for the global energy market. Washington claims control over the waterway, while Tehran announces the closure of the strait to commercial shipping. It is fundamentally significant for the global FES that oil from Saudi Arabia, Iraq, and Kuwait, as well as Qatari LNG, passes through Hormuz: the restriction on nearly one-fifth of the global liquefied gas supply has already triggered a price shock in Europe and Asia.
Market Scenarios
- A strike on Iran's export infrastructure, including Hark Island, will add several dollars in risk premium to oil prices.
- A freeze in conflict with limited transit—maintaining prices in the upper range with high volatility.
- A diplomatic breakthrough and restoration of shipping—rapidly reversing the premium and correcting Brent to $85–90.
OPEC+: Meeting on September 6 as the Main Benchmark of the Week
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 concluding the voluntary cuts of 1.65 million b/d. The total permitted production level has reached 36.2 million barrels per day, with further increases paused until the end of 2026, while the baseline restrictions of approximately 2 million b/d, effective since 2022, remain in place. On Sunday, September 6, ministers will meet again: the market will seek answers on whether the alliance is ready to utilise spare capacity to compensate for lost Middle Eastern volumes. A separate intrigue is the redistribution of quotas following the UAE's exit from OPEC and OPEC+ in May 2026.
Gas Market: Europe Enters Winter with Record Low Stockpiles
The European gas market is experiencing the most intense start to autumn since the crisis of 2022–2023. October futures at the TTF hub are trading around €880–895 per thousand cubic metres, up approximately 20% since July, and for the first time in five months, surpassed the €800 mark at the end of August. Traders are seriously discussing testing the €1000 level. The foundations of this rally include:
- EU underground storage filling is only about 58%—historically low levels ahead of the heating season;
- Considerable volumes of Qatari LNG are off the market due to shipping constraints through the Strait of Hormuz;
- Increased summer gas consumption by power plants amid heat and rising energy demand;
- Supplier warnings about risks to stable energy supply in the region for the upcoming winter.
LNG: American Exports as a Balancer
The market is being partially salvaged by new liquefaction capacities in the USA, operating at near-record levels of utilisation, as well as decreased demand in Asia: China has cut its LNG imports by about 18% in August, and price-sensitive buyers such as Pakistan are shunning expensive spot cargoes. However, there are no available volumes to fully compensate for the losses from the Middle East, maintaining high price volatility in gas markets in Europe and Asia.
Power Generation and Renewables: Data Centres Reshaping Demand Dynamics
Global power generation is adapting to expensive gas by increasing reliance on renewable sources: where the share of renewables is higher, dependency on imported fuels is noticeably lower. A structural trend this year is the explosive growth in energy consumption by data centres and artificial intelligence infrastructure: global data centre consumption is now comparable to the energy balance of a large European country, and access to grid capacity is becoming a scarce asset. China is launching mega-projects for direct supply of solar and wind generation to data centre clusters, while in the USA, tech giants are contracting "green" electricity through long-term PPAs, and investments in grids and storage systems are emerging as one of the main capital expenditure directions in the sector.
Coal: A Safety Net Amid the Gas Crisis
The coal market is once again benefitting from the gas crisis. The shift of power plants from more expensive gas to coal is being observed in both Asia and several European countries, supporting prices for thermal coal and the capacity of key exporters—Indonesia, Australia, Russia, and South Africa. China and India continue to maintain high volumes of coal generation to cover peak loads: in the short term, coal remains an indispensable safety net for global energy, despite long-term decarbonisation 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 high, surpassing 75,000 roubles per tonne; local supply disruptions persist in several regions, although the situation is gradually stabilising in the capital region. The government is responding with a package of measures:
- A complete ban on gasoline exports is in effect until January 31, 2027, applying to both producers and traders;
- The ban on diesel and marine fuel exports has been extended until September 30 for producers and until the end of January 2027 for other exporters;
- As of September 1, the sale of gasoline of ecological classes K2–K4 has been permitted to enhance fuel availability in the regions;
- The deficit is being met through imports from Belarus, Kazakhstan, India, and Turkey, as well as the accelerated recovery of refineries and reduced downtime for planned repairs;
- The Federal Antimonopoly Service (FAS) has intensified oversight of pricing among independent filling stations, while the damping mechanism continues to compensate oil producers for some lost revenues.
Key Indicators for Investors for Friday, September 4
- Dynamics of the USA-Iran Conflict—any signals regarding strikes on export infrastructure or, conversely, negotiations could shift 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 even before the meeting.
- Filling Rates of European UGS Facilities—these will determine whether TTF gas remains above €900 per thousand cubic metres.
- Transit Through the Strait of Hormuz—the restoration of shipping will be a major deflationary factor for oil and LNG.
- Russian Fuel Market—exchange prices for gasoline and the effects of targeted relaxations for diesel exports.
The base scenario for the end of the week anticipates sustained high prices for oil and gas amid significant volatility: the energy market remains driven not by the balance of supply and demand but by geopolitics, and prior to the OPEC+ meeting on September 6, investors should brace for sharp intraday price movements.
