Short-lived optimism fades as fuel prices rise again

The tensions in the Middle East continue to dominate the energy markets. With a ceasefire from Tuesday into Wednesday, there was optimism about the opening of the Strait of Hormuz and oil and gas prices fell. That hope has now once again been dashed. Part of the price decline has been reversed today.There may be a 14-day ceasefire between the US and Iran, but what exactly the parties have agreed remains unclear. Iran does not seem to be planning to open the Strait of Hormuz, certainly not as long as Israel continues to attack Lebanon. The oil and gas markets initially eased, but prices are rising again today following this development.The ceasefire took effect overnight from Tuesday 7 April into Wednesday 8 April. The price of a barrel of Brent crude fell by 13.3% from $109.27 to $94.75. However, that decline has partly been reversed today. At the time of writing on Thursday afternoon, 9 April, the price stands at $98.47. Six weeks ago, on 27 February, a day before the American Israeli attacks on Iran, a barrel of Brent crude still cost $72.87.Gasoil cost €205.05 per 100 litres via LTO on 7 April (from 4,000 litres). On 8 April, that had fallen by almost €30 to €175.73 per 100 litres. Today, the same quantity of diesel costs €183.73.The gas price on the TTF futures market also fell after the temporary peace agreement. On Tuesday 7 April, the price was €53.25 per megawatt hour. Yesterday, it had fallen by 14.9% to €45.30 per MWh. The price has risen today, but only modestly. At the time of writing, gas is trading at €45.82 per MWh. By comparison, on 27 February that was €31.51 per MWh.With this high gas price, there is little incentive to fill European gas storage. The gas filling season started on 1 April and Dutch gas storage is only 5.4% full according to data from Gas Infrastructure Europe.For several hours after the ceasefire, there have been no attacks by the US on Iran and Iran has also refrained from attacking the Gulf states. It is crucial for the oil and gas price in the longer term that no more production facilities are damaged, but at the moment it is especially important that tankers can transport oil and LNG out of the area. The Strait of Hormuz is the vital shipping route through which roughly one fifth of globally traded oil and gas is transported, and Iran is keeping it effectively closed through targeted attacks on ships.One of Iran's demands for a definitive peace agreement would be control over the strait. According to the New York Times, Iran wants to charge a $2 million toll per ship allowed through and share this with Oman, on the opposite side of the strait. Part of it would then be used to repair the infrastructure that has been bombed to pieces. The unrest has not diminished after Trump said that the US, in cooperation with Iran, could start charging tolls in the strait.Electricity The daily average on the European Power Exchange (Epex Spot) moved between €123.66 per MWh on 2 April and €14.46 per MWh on 5 April. A particularly low daily price, but many quarter-hour prices were negative on Easter Sunday. On the balancing market, a record was set on Easter Monday with a negative price of nearly €4,000 per MWh.