Oil Market: Brent Above $95 Amid Military Premium
Oil prices are demonstrating rapid growth. Brent futures closed Tuesday with an increase of more than 4.5% and continued to rise on Wednesday, trading in the range of $95–97 per barrel; US WTI has settled above $90. The market is factoring in the growing risk of supply disruptions from the region that accounts for approximately one-fifth of global maritime oil trade. Key drivers of prices include:
- Military Escalation: The US has carried out a series of strikes on targets in Iran, including attacks on two Iranian tankers; Tehran responded with rocket strikes on a US base in Jordan and launches towards the UAE.
- Threat to Kharg Island: Washington has openly suggested a strike on Iran's main oil export hub, which would deal a direct blow to crude supply.
- Shipping Paralysis: Transit through the Strait of Hormuz has reportedly fallen to approximately 6 million barrels per day from 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 that while support around $90 per barrel holds, market control remains with buyers; however, with each wave of increases, the risk of a sharp correction grows should de-escalation occur.
Geopolitics: The Strait of Hormuz as the Epicentre of Global Energy Risk
The US-Iran conflict has been ongoing for about six months, but the current phase appears to be the most dangerous for the global FEC. Iran has declared the Strait of Hormuz closed to commercial shipping, while Washington insists it controls the waters. At the same time, the US is consulting with Russia and China regarding sanctions pressure on Tehran. Importantly for the global market, the Strait not only facilitates oil from Saudi Arabia, Iraq, Kuwait, and the UAE but also Qatari LNG—temporary losses amounting to nearly 20% of global LNG supplies have already triggered a price shock in gas markets in Europe and Asia. Any scenario ranging from a blockade to strikes on Iran's export infrastructure could add several dollars in risk premium to prices.
OPEC+: Ending the Production Increase Cycle and Pausing Until Year-End
Amid geopolitical turbulence, the exporters' alliance is adhering to its previously approved 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, completely concluding the exit from voluntary cuts of 1.65 million b/d. The total permissible production level has reached 36.2 million barrels per day. Further increases are paused until the end of 2026; meanwhile, basic limits of approximately 2 million b/d, in place since 2022, remain. The next ministerial meeting is scheduled for September 6—Market participants will closely observe whether the alliance responds to the Middle Eastern premium and dropping volumes of Iranian exports. An additional point of intrigue is the redistribution of quotas following the UAE's exit from OPEC and OPEC+ in May 2026.
Gas Market: Europe Delays Stockpiling, TTF Heads Towards $1000
The European gas market is experiencing the most tense start to autumn in recent years. October futures on the TTF hub are trading around $880–895 per thousand cubic metres, having gained about 2% since the start of the week—at the end of August, prices exceeded $800 for the first time in five months, and now the market is seriously discussing movement towards $1000. Reasons for the price rally include:
- Significant drops in LNG volumes from Qatar and the UAE due to shipping restrictions through the Strait of Hormuz.
- Historically low storage levels in European underground storages ahead of the heating season.
- Increased gas consumption by power plants during summer amidst heat and rising energy demand.
- Competition for spot LNG cargoes, only partially alleviated by reduced purchases from China and refusals from price-sensitive buyers such as Pakistan.
LNG: US Export as a Market Hedge
The balancing factor is new liquefaction capacity in North America: the Golden Pass and Plaquemines projects are ramping up production, while LNG exports from the US remain near record levels. Nevertheless, there are limited available volumes to swiftly compensate for Middle Eastern losses, which keeps price volatility high in Europe and Asia.
Electric Power and Renewables: Renewable Generation Mitigates Shock
Global electricity markets are adapting to gas shortages. According to industry analysts, the ongoing addition of solar and wind capacity has been a key factor in diversifying energy supply and mitigating the effects of the gas shock: where the share of renewables is higher, the dependence on expensive imported fuels is felt less acutely. Simultaneously, 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 US, energy systems are revising load forecasts, while access to grid capacity is turning into a scarce asset, enhancing the investment appeal of generation and grid companies.
Coal: Demand Sustained by Expensive Gas
The coal market has once again benefited from the gas crisis. The switch of power plants from expensive gas to coal is observed both in Asia and in certain European countries, supporting the prices of thermal coal and the load of exporters—Indonesia, Australia, Russia, and South Africa. China and India continue to maintain high levels of coal generation to cover peak loads, and in the short term, coal remains a backup resource for global energy, despite long-term decarbonisation goals.
Russian Oil Products Market: Export Restrictions and Gradual Easing
Internally, the Russian FEC continues to operate under a stringent regulatory regime. The full ban on petrol exports has been extended to January 31, 2027, applying to both producers and traders. However, as of September 1, restrictions on diesel, marine fuel, and gasoil have been eased—their export has been allowed again for direct producers, reducing the risk of oversupply at refineries and declines in processing volumes. Additional measures include:
- Increased regulations on fuel sales to ensure the domestic market;
- Control by the Federal Antimonopoly Service over speculative resales of petroleum products;
- A damping mechanism compensating oil companies for part of the lost export revenues.
Fuel stocks in the country are comparable to last year, and the situation in regions that experienced disruptions in spring is gradually normalising—however, the autumn maintenance season for refineries requires regulators to remain vigilant.
What This Means for Investors: Key Milestones for September 3
The FEC market enters Thursday with the highest geopolitical premium seen in months. Investors and market participants should monitor:
- Dynamics of the US-Iran Conflict—any signals about strikes on Kharg Island or, conversely, about negotiations could shift Brent by several dollars in either direction.
- Shipping Through the Strait of Hormuz—the resumption of transit would become the main deflationary factor for oil and LNG.
- OPEC+ Meeting on September 6—the alliance's reaction to falling volumes and the price rally.
- Fill Rates of European Underground Storages—their status will determine if gas remains above $900 per thousand cubic metres.
- Russian Fuel Market—the effects of the partial reopening of diesel exports and exchange rates for petrol.
The baseline scenario for the coming days is continued high volatility at elevated prices for oil and gas: the energy market is once again trading not on the balance of supply and demand, but on geopolitics.
