Oil Market: Brent Above $95 Amid Military Premium
Oil prices are showing a rapid increase. Brent futures closed Tuesday up more than 4.5% and continued to rise on Wednesday, trading in the range of $95–97 per barrel; American WTI has stabilized above $90. The market is pricing in the increasing risk of supply disruptions from a region responsible for about one-fifth of global maritime oil trade. Key drivers for prices include:
- Military Escalation: The US has launched a series of strikes against targets in Iran, including attacks on two Iranian tankers; Tehran responded with missile strikes on a US base in Jordan and launches toward 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: Analysts estimate that transit through the Strait of Hormuz has dropped to about 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 increased freight and insurance costs in the Gulf.
Analysts note that as long as support around $90 per barrel holds, buyers retain control in the market; however, with each wave of growth, the risk of a sharp correction increases in the event of de-escalation.
Geopolitics: The Strait of Hormuz as the Epicenter 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 FES. Iran has announced the closure of the Strait of Hormuz to commercial shipping, while Washington insists it controls the waters. Simultaneously, the US is consulting with Russia and China to apply sanctions pressure on Tehran. It is critical for the global market that the strait not only carries oil from Saudi Arabia, Iraq, Kuwait, and the UAE, but also Qatari LNG—a temporary loss of nearly 20% of global liquefied gas supply has already triggered a price shock in gas markets in Europe and Asia. Any scenario—from a blockade to an attack 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
In the midst of the geopolitical storm, the alliance of exporters is adhering to its previously approved plan. Starting in September, seven key OPEC+ countries—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—have increased quotas by 188,000 barrels per day, completely ending the voluntary cuts of 1.65 million barrels per day. The total allowed production level has reached 36.2 million barrels per day. Further increases are on hold until the end of 2026; however, the basic restrictions of approximately 2 million barrels per day, which have been in effect since 2022, remain in place. The next ministerial meeting is scheduled for September 6, and the market will closely watch whether the alliance reacts to the Middle Eastern premium and falling volumes of Iranian exports. An interesting development is the potential redistribution of quotas after the UAE withdrew from OPEC and OPEC+ in May 2026.
Gas Market: Europe Lagging in Supplies, TTF Approaching $1000
The European gas market is experiencing the most intense start to autumn in recent years. October futures at the TTF hub are trading around $880–895 per thousand cubic meters, increasing about 2% since the beginning of the week—at the end of August, prices crossed the $800 mark for the first time in five months, and now the market is seriously discussing a move toward $1000. The reasons for the price rally include:
- Significant volumes of LNG from Qatar and the UAE have been lost due to shipping restrictions through the Strait of Hormuz.
- Historically low storage levels 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 alleviated by reduced purchases from China and rejections by price-sensitive buyers such as Pakistan.
LNG: American Exports as a Market Insurance
A balancing factor is the new liquefaction capacity in North America: the Golden Pass and Plaquemines projects are ramping up production, and LNG exports from the US are holding near record levels. However, the market has limited available volumes to promptly compensate for Middle Eastern losses, which maintains high price volatility in Europe and Asia.
Electricity and Renewables: Renewable Generation Mitigates the Shock
The global electricity sector is 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 impacts of the gas shock: where the share of renewables is higher, dependence on expensive imported fuels is felt less. At the same time, rising gas prices are prompting a shift back to coal in several countries in Asia and Europe. A distinct structural trend is the rapid growth in electricity demand from data centers and artificial intelligence infrastructure: in the US, energy systems are revising load forecasts, and access to network capacity is becoming a scarce asset, increasing the investment attractiveness of generation and network companies.
Coal: Demand Supported by Expensive Gas
The coal market has once again benefited from the gas crisis. Power plants switching from expensive gas to coal is being observed in both Asia and certain European countries, supporting prices for energy coal and the loading of exporters—Indonesia, Australia, Russia, and South Africa. China and India maintain high volumes of coal generation to cover peak loads, and in the short term, coal remains a buffer resource for the global energy sector, despite long-term decarbonization goals.
Russian Fuel Market: Export Restrictions and Specific Easing
Within the domestic framework of the Russian FES, strict regulatory measures continue 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 fuel, and gas oils have been eased—their export is once again allowed for direct producers, reducing the risk of overstocking at refineries and declines in processing volumes. These measures are complemented by:
- increased quotas for fuel sales on exchanges to ensure the domestic market;
- control by the Federal Antimonopoly Service over speculative resales of petroleum products;
- a damping mechanism compensating oil producers for part of the lost export revenue.
Fuel stocks in the country are comparable to last year's, and the situation in regions that experienced disruptions in 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 FES market enters Thursday with the highest geopolitical premium in months. Investors and market participants should monitor:
- Dynamics of the US-Iran Conflict—any signals of a strike on Kharg Island or, conversely, negotiations could shift Brent by several dollars in either direction.
- Shipping Through the Strait of Hormuz—the restoration of transit will 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.
- Filling Rates of European Underground Gas Storage—this will determine whether gas holds above $900 per thousand cubic meters.
- Russian Fuel Market—the effect of the partial opening of diesel exports and stock market prices for gasoline.
The baseline scenario for the coming days predicts high volatility amid elevated oil and gas prices: the energy market is once again trading geopolitics rather than balancing supply and demand.
