Oil Market: Military Premium vs. Signals of Buyer Fatigue
Oil prices moved in different 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 climbed to $97, and WTI to $92.5 per barrel. On Friday, the market opens with a sustained sensitivity to news headlines. Key drivers for prices:
- Escalation of the Conflict: The US struck approximately 100 Iranian targets, including radar systems, maritime facilities, and communication objects; Tehran responded with strikes on US facilities in the region and attacks on commercial vessels.
- Restricted Transit through Hormuz: The movement of tankers through the strait, which accounted for up to 20% of global maritime oil trade, has sharply decreased, with freight and insurance costs in the Persian Gulf remaining extremely high.
- Bet on Alternate Routes: Market participants expect that alternative pipeline and marine supply channels will partially compensate for lost volumes — this is what is restraining prices from skyrocketing to $100.
- Risk of a Sharp Correction: The higher the military premium rises, the more painful the pullback could be in the case of signals for de-escalation or negotiations.
Analysts see the basic range for the upcoming sessions between $92–98 per barrel for Brent: support at $90 currently appears strong, while resistance is represented by the psychological level of $100.
Geopolitics: The Strait of Hormuz Remains the Epicenter of Energy Risk
The conflict between the US and Iran has now been ongoing for seven months, and the current phase is one of the most dangerous for the global energy market. Washington asserts control over the waters, while Tehran claims it will close the strait to commercial navigation. It is fundamentally important for the global FEC that not only oil from Saudi Arabia, Iraq, and Kuwait passes through Hormuz, but also Qatari LNG: restrictions affecting nearly a fifth of global liquefied gas supply have already provoked a price shock in Europe and Asia.
Scenarios Market is Pricing In
- A strike on Iran's export infrastructure, including Kharg Island, will add several dollars of risk premium to oil prices.
- A freezing of the conflict with limited transit will maintain prices in the upper range with high volatility.
- A diplomatic breakthrough and the restoration of navigation would lead to a rapid removal of the premium and a correction of Brent to $85–90.
OPEC+: Meeting on September 6 as the Main Guideline for the Week
Since September, seven key OPEC+ countries—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—have increased their quotas by 188,000 barrels per day, fully completing their exit from voluntary cuts of 1.65 million b/d. The total allowable production level has reached 36.2 million barrels per day, with further increases put on hold until the end of 2026, while the base restrictions of approximately 2 million b/d, in place since 2022, remain. On Sunday, September 6, ministers will meet again: the market is looking for answers as to whether the alliance is ready to utilize free capacities to compensate for the declining volumes from the Middle East. An additional intrigue involves the redistribution of quotas following the UAE's exit from OPEC and OPEC+ in May 2026.
Gas Market: Europe Enters Winter with Record Low Reserves
The European gas market is experiencing the most tense 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% since July and surpassing the $800 mark for the first time in five months at the end of August. Traders are seriously discussing testing the $1000 level. The fundamentals of the rally include:
- Storage levels in the EU at just around 58% — a historically low level ahead of the heating season;
- Significant volumes of Qatari LNG have dropped out due to maritime transit restrictions through the Strait of Hormuz;
- Increased summer gas consumption by power plants due to heat and rising energy demand;
- Warnings from suppliers about risks to stable energy supplies in the region this winter.
LNG: American Exports as a Balancer
The market is partially supported by new liquefaction capacities in the US, operating near record loading levels, as well as reduced demand in Asia: China has cut LNG imports in August by about 18%, while price-sensitive buyers like Pakistan are rejecting expensive spot cargoes. However, there are insufficient free volumes to fully compensate for Middle Eastern losses, keeping gas price volatility high in Europe and Asia.
Power Generation and Renewables: Data Centers Reshape Demand
The global power sector is adapting to expensive gas through renewable sources: in regions where the share of renewables is higher, dependence on imported fuel is felt to be weaker. A structural trend for the year is the explosive growth of energy consumption by data centers and artificial intelligence infrastructure: global data center consumption is now 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 supplies of solar and wind generation to data center clusters, while in the US, tech giants are contracting "green" electricity through long-term PPAs, and investments in networks and storage systems are becoming a key focus of capital expenditures in the sector.
Coal: A Safety Resource Amidst Gas Shock
The coal market is once again benefiting from the gas crisis. Shifts from expensive gas to coal at power plants are being observed both in Asia and certain European countries, supporting prices for energy coal and the load of key exporters — Indonesia, Australia, Russia, and South Africa. China and India are maintaining high volumes of coal generation to cover peak loads: in the short term, coal remains an irreplaceable safety net for global energy, despite long-term decarbonization goals.
Russian Oil Products Market: Record AI-92 and Strict Regulation
Russia's domestic fuel market remains under pressure. Exchange prices for AI-92 gasoline have reached a historic high, exceeding 75,000 rubles per ton; in certain regions, local supply disruptions persist, although the situation is gradually stabilizing in the capital region. The government is responding with a set of measures:
- A complete ban on gasoline exports is in effect until January 31, 2027, applying to both producers and traders;
- The ban on exports of 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 have been permitted to increase fuel availability in the regions;
- The deficit is being covered by imports from Belarus, Kazakhstan, India, and Turkey, as well as the rapid recovery of oil refineries and shortened planned maintenance schedules;
- The Federal Antimonopoly Service has intensified control over pricing at independent gas stations, while the dampening mechanism continues to compensate oil companies for a portion of lost earnings.
Key Indicators for Investors on Friday, September 4
- Dynamics of the US-Iran Conflict— Any signals about hits on export infrastructure or, on the other hand, about negotiations could shift Brent by several dollars either way.
- Preparation for the OPEC+ Meeting on September 6— Leaks regarding the positions of Saudi Arabia and Russia will set the vector for oil quotes even before the meeting.
- Filling Rates of European Gas Storage Facilities— Their development will determine whether gas at TTF remains above $900 per thousand cubic meters.
- Transit through the Strait of Hormuz— The restoration of navigation will become 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 by the end of the week foresees continued elevated prices for oil and gas amid high volatility: the energy market is still trading geopolitical concerns rather than balancing supply and demand, and ahead of the OPEC+ meeting on September 6, investors should prepare for sharp intraday price movements.
