Escalation of war in Iran drives fuel prices further up

The oil price is creeping back toward $100 per barrel. Developments in the Middle East offer little hope of normalisation and Russia is seeing production of oil products decline due to Ukrainian drone attacks on refineries. According to Goldman Sachs, the oil price could rise to $120 if there are more attacks on ships in the Strait of Hormuz. At the moment, very few tankers are passing through the strait, on average ten per day over the past week and a half. The current price of a barrel of Brent crude oil is $98.69 (on Tuesday afternoon, 8 August). That is about 12% more than two weeks ago. The last time Brent oil was above $100 was 23 July. There is little sign of a peace agreement. In fact, the war in the Middle East appears to be escalating. The US has attacked Iranian tankers and Iran carried out retaliatory actions against ships linked to the US. Iran has threatened to take severe retaliatory measures in the event of new US attacks, including on energy infrastructure in the Gulf region. According to Saudi Arabia (which supports the Yemeni government), Houthi rebels backed by Iran from Yemen have attacked Saudi civilian targets and 'facilities and installations in the energy sector'. What gives the global market a little room is that China managed to import more than 6% more crude oil in August than in July and was therefore able to export more refined products (+29%), Bloomberg reports. Even so, imports are still 23% below those of August last year. China has mainly increased imports of Russian oil. That country is struggling with declining production capacity due to Ukrainian drone attacks on oil refineries. Investment bank Goldman Sachs has issued a grim forecast: if attacks on shipping in the Middle East increase, the oil price could rise to $120 per barrel. When exports normalise again (which is not the case now), the bank expects the oil price to fall to $80. Diesel The diesel price has also risen in recent days to €191.05 per 100 litres from 4,000 litres (LTO member price), but is €2 lower than on 3 September. Gas At €75.94 per MWh, gas reaches a new recent high. The last time the price was higher was 2 January 2023. Meanwhile, European gas storage is almost 67% full (79% at this time last year), while the Netherlands remains stuck at 50% (close to 67% last year). According to the Dutch Climate and Green Growth Minister Stientje van Veldhoven (D66), the government will ensure that there will be no gas shortage in the Netherlands in winter and that sufficient LNG capacity has also been built for this purpose. She said this on WNL on Sunday. However, there will be no price cap like during the start of the war in Ukraine. Electricity The average day price for power on the Epex Spot was lowest last week on 5 September at €76.19 per MWh and today (8 September) highest at €171.23 per MWh.