Iran keeps energy market under high tension

The oil and gas market remains in the grip of tensions between Iran and the US. In Europe, the gas price rose sharply to its highest level in 3.5 years. Today, prices did fall slightly again. The Brent oil price has been declining somewhat again since Friday. There is a glimmer of hope for new negotiations between the US and Iran. Furthermore, the US came with an economic D-Day for Iran. Yesterday, the highest point on the TTF gas futures exchange was reached since January 2023. The price then was €68.32 per megawatt hour. Today the price weakened somewhat, but with €65.58 per MWh at the time of writing (Tuesday afternoon 25 August), the price is still considerably higher than at the end of June when the price came to just above €40 per MWh. European gas reserves relatively empty European gas reserves are relatively empty with a fill level of 63%. Last year around this time they were 76% full. The price incentive to fill the reserves further is limited. Normally gas is stored when the price is relatively low, in order to sell it in winter at a higher price. That dynamic is now absent. In the Netherlands, the reserves are only 44% full, while the fill level a year ago was almost 64% according to data from Gas Infrastructure Europe. The low fill level could create more price pressure if temperatures fall in the winter months. However, if a final agreement is reached between Iran and the US and as a result more LNG from Qatar can again reach the world market via the Strait of Hormuz, that will have a price-depressing effect. Unless another black swan occurs. At the time of writing, the price of Brent oil stands at $86.21 per barrel. A drop of almost 9% compared with last Friday when it stood at $94.38. The Dutch diesel price also shows a decline. On 19 August, the LTO member price was €186.05 per 100 liters (from 4,000 liters). On Tuesday 25 August this is €177.05, a decrease of almost 5%. The war the US has unleashed in Iran is responsible for the high gas and oil prices. US Treasury Secretary Scott Bessent announced new economic sanctions against Iran yesterday during a press conference, an economic D-Day, as the Trump administration calls it, under the name Operation Economic Outcast. Countries that continue to do business with Iran are also in the spotlight, although Bessent avoided naming China, which buys oil from Iran. Few details were also given. Since June, the negotiations between the US and Iran have been at a standstill. Pakistan is now trying to breathe new life into the talks. Although both countries have not been attacking each other's targets for some time, attacks on ships in the Strait of Hormuz continue. Coal-fired power plants running at full capacity The daily average on the Epex varied last week from €167.72 per MWh (21 August) and €88.84 per MWh (23 August). High gas prices are feeding through into electricity prices. In addition, the less hot and dry weather has not yet translated into higher water levels, meaning that less cooling water is still available for electricity and nuclear power plants. The transport of coal via rivers is also being hampered. Due to the high gas prices, Dutch coal-fired power plants are running at full capacity. A lot of electricity is also being exported to Belgium because of maintenance at two nuclear power plants.