Oil Market: Military Premium vs. Signals of Buyer Fatigue
Oil prices moved in mixed directions on Thursday: after three sessions of steady growth that lifted Brent to five-week highs above $96, the market corrected to $95 in the morning. However, by midday, buyers regained control—November Brent futures rose to $97, while WTI reached $92.50 per barrel. The market opens on Friday with a high sensitivity to news headlines. Key drivers affecting prices include:
- Escalation of Conflict: The U.S. struck approximately 100 Iranian targets, including radar systems, maritime facilities, and communication assets; Tehran retaliated by targeting American installations in the region and attacking commercial vessels.
- Restricted Transit through Hormuz: Tanker movement through the strait, which accounted for up to 20% of global marine oil trade, has sharply declined, while freight and insurance costs in the Persian Gulf remain extremely high.
- Bets on Alternate Routes: Market participants anticipate that alternative pipeline and maritime supply channels will partially compensate for lost volumes—this factor is restraining prices from spiking toward $100.
- Risk of Sharp Correction: The higher the military premium rises, the more painful a retreat may be if there are signals of de-escalation or negotiations.
Analysts see the base range for the next sessions between $92–98 per barrel of Brent: support at $90 currently appears robust, while the psychological resistance level is set at $100.
Geopolitics: Strait of Hormuz Remains Energy Risk Epicenter
The U.S.-Iran conflict has now entered its seventh month, and the current phase is among the most perilous for the global energy market. Washington claims control over the waters, while Tehran asserts it has closed the strait to commercial shipping. It is crucial for the global FEC that not only oil from Saudi Arabia, Iraq, and Kuwait passes through Hormuz, but also Qatari LNG: limiting nearly one-fifth of global liquefied gas supply has already triggered a price shock in Europe and Asia.
Market Scenarios
- A strike on Iran's export infrastructure, including the Kharg Island, would add several dollars to the risk premium for oil.
- A freeze in the conflict with limited transit would maintain prices in the upper range amid high volatility.
- A diplomatic breakthrough and restoration of shipping would result in a quick reduction of the premium and a correction of Brent to $85–90.
OPEC+: September 6 Meeting as Key Benchmark of the Week
In September, seven key OPEC+ countries—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—have increased quotas by 188,000 barrels per day, fully ending the voluntary cuts of 1.65 million b/d. The total permitted production level has reached 36.2 million barrels per day, with no further increases planned until the end of 2026, while the base restrictions of approximately 2 million b/d, in effect since 2022, remain. On Sunday, September 6, ministers will gather once again: the market will seek to determine whether the alliance is ready to employ spare capacity to compensate for lost Middle Eastern volumes. 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 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 around $880–895 per thousand cubic meters, gaining about 20% in July and breaching the $800 mark for the first time in five months at the end of August. Traders are seriously discussing a test of the $1000 level. The fundamentals of this rally include:
- EU underground storage filling at only about 58%—a historically low level ahead of the heating season;
- Significant Qatari LNG volumes loss due to shipping restrictions through the Strait of Hormuz;
- Increased summer gas consumption by power plants amid heatwaves and rising energy demand;
- Warnings from suppliers about risks to stable energy supply in the region this coming winter.
LNG: U.S. Exports as a Balancer
The market is partially supported by new liquefaction capacity in the U.S., operating near record utilization levels, as well as diminished demand in Asia: China reduced LNG imports in August by about 18%, while price-sensitive buyers like Pakistan are rejecting expensive spot cargoes. However, the market lacks sufficient free volumes to fully offset Middle Eastern losses, maintaining high price volatility for gas in Europe and Asia.
Electricity and Renewables: Data Centers Reshape Demand Landscape
The global electricity sector is adapting to expensive gas through renewable sources: where the share of renewables is higher, dependence on imported fuels is less felt. A structural trend for the year remains the explosive growth in energy consumption by data centers and artificial intelligence infrastructure: global data center consumption is already comparable to the energy balance of a large European country, and access to grid power is becoming a scarce asset. China is launching megaprojects for direct supply of solar and wind generation to data center clusters, while in the U.S., tech giants are contracting "green" electricity through long-term PPAs, with investments in networks and storage systems becoming one of the main focal points for capital expenditures in the sector.
Coal: A Hedge Resource Amid Gas Shock
The coal market is once again benefiting from the gas crisis. The transition of power plants from expensive gas to coal is being observed in both Asia and certain European countries, supporting the prices of thermal coal and the utilization 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 hedge for global energy, despite long-term decarbonization goals.
Russian Fuel 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 historic high, exceeding 75 thousand rubles per ton; in several regions, local supply disruptions persist, although the situation is gradually stabilizing in the capital agglomeration. The government is responding with a range of measures:
- A complete ban on gasoline exports is in effect until January 31, 2027, applying to both producers and traders;
- The ban on exporting diesel and marine fuel has been extended until September 30 for producers and until the end of January 2027 for other exporters;
- As of September 1, sales of gasoline of ecological classes K2–K4 are allowed to enhance fuel availability in regions;
- The deficit is being offset through imports from Belarus, Kazakhstan, India, and Turkey, as well as accelerated recovery of refineries and reduced timelines for planned repairs;
- The Federal Antimonopoly Service has intensified control over pricing at independent gas stations, while the damping mechanism continues to compensate oil companies for part of the lost revenues.
Key Milestones for Investors on Friday, September 4
- Dynamics of the U.S.-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 about Saudi Arabia's and Russia's positions will set the tone for oil prices even before the meeting.
- Rate of Filling European UGSS—this will determine whether gas at TTF holds above $900 per thousand cubic meters.
- Transit Through the Strait of Hormuz—restoration of shipping will serve as the main deflationary factor for oil and LNG.
- Russian Fuel Market—exchange prices for gasoline and the effects of targeted easing for diesel exports.
The baseline scenario for the end of the week is the persistence of high oil and gas prices amid high volatility: the energy market continues to trade on geopolitics rather than balancing supply and demand, and investors should prepare for sharp intraday price movements ahead of the OPEC+ meeting on September 6.
