Uncertainty over Iran keeps energy prices elevated

Het conflict in the Middle East has now been ongoing for three months. Uncertainty continues to dominate the negotiations between Iran and the United States. Today, energy markets are reacting cautiously positively. Meanwhile, higher energy costs are feeding through into inflation in the eurozone.Tehran is reported to have suspended the peace talks due to Israeli military activity in Lebanon, but according to US President Trump, discussions are continuing “at a rapid pace”.Before the weekend, oil fell to its lowest level since 17 April, at $91.12 per barrel. Oil prices rose slightly on Monday but are once again trending downwards today. At the time of writing (Tuesday afternoon, 2 June), oil is trading at $93.68 per barrel.Diesel prices have also edged higher. Before the weekend, diesel was priced at €158.05 per 100 litres for purchases from 4,000 litres (LTO members’ price), the lowest level since 3 March. The current price stands at €161.05 per 100 litres.Gas prices also increased after the weekend. On Friday, gas on the TTF was traded at €46.00 per MWh. The closing price on 1 June was €49.09 per MWh, an increase of almost 7%. At the time of writing, the price has eased slightly to €47.71 per MWh.Last week, the European Commission’s Gas Coordination Group and Oil Coordination Group discussed the security of gas and oil supplies in the EU in light of the ongoing tensions in the Middle East. Despite the challenging market conditions, the Gas Coordination Group stated that there are no immediate concerns regarding gas supply security in the EU for the coming winter season.According to the group, EU gas storage facilities could be 80% full by the end of the summer, which would ensure adequate gas supplies for the coming winter. However, the filling levels of gas storage facilities should continue to be assessed regularly. The group also noted that Member States have not, so far, planned any additional market interventions.According to data from Gas Infrastructure Europe, EU gas storage facilities are currently just over 40% full. In the Netherlands, the figure is still below 16%. On 1 June 2025, European gas storage facilities were more than 48% full, while Dutch storage facilities stood at 36%.As far as crude oil and petroleum products are concerned, the EU has so far only been affected by higher prices rather than disruptions to supply. The Oil Coordination Group warned that if the situation does not improve in the coming weeks, markets are expected to tighten further, particularly for aviation fuel.Over the past week, the lowest average daily price on the Epex power exchange was €83.56 per MWh on 30 May, while the highest was €144.27 per MWh on 1 June.High energy prices drive inflationHigh energy prices are also pushing up inflation in the eurozone, according to data published today by Eurostat. Inflation in the eurozone reached 3.2% in May. Excluding energy, inflation stood at 2.4%.Energy prices had actually been lower than a year earlier in January and February (-4.0% and -3.1% respectively). However, that trend reversed following the US and Israeli attack on Iran on 28 February. In March, energy prices were 5.1% higher year-on-year, rising to 10.8% in April and 10.9% in May.