Μake us preferred on Google Rising tensions in the Middle East are pushing oil prices higher, with Brent crude moving further above $90 a barrel as investors assess the risk of disruptions to global energy supplies.
Brent rose above $91 a barrel in Tuesday trading, extending the previous day’s gains. U.S. West Texas Intermediate crude was also approaching $87 a barrel.
The latest increase comes as fighting in the region escalates, raising concerns about further disruptions to energy flows and supporting continued gains in crude oil futures.
Oil markets watch Iran conflict
Investors are closely monitoring developments in the war involving Iran. U.S. forces targeted two Iranian missile launchers on the island of Larak, while Tehran responded with attacks in the United Arab Emirates and Jordan.
The moves marked a resumption of hostilities between the United States and Iran after about a month of relative calm.
U.S. President Donald Trump has also extended his military threats to Kharg Island, a key Iranian oil export hub.
Meanwhile, oil shipments continue to pass through the Strait of Hormuz, a critical energy transit route. Major Gulf producers including the United Arab Emirates, Saudi Arabia, Kuwait and Iraq continue to export oil, although risks to shipping remain.
Those risks were underscored when a supertanker caught fire in the strait after hitting two naval mines.
In Russia, strikes at refineries are further reducing global refining capacity and pushing profit margins for refined petroleum products to new highs.
European gas prices top €70
Natural gas prices are also rising in Europe. The price of gas has exceeded €70 per megawatt-hour, the first time it has reached that level since early 2023.
The increase is attributed mainly to the sluggish pace of gas storage replenishment in recent months. European storage facilities are currently about 65% full, considerably below normal levels for this time of year.
Unlike oil, only relatively small volumes of liquefied natural gas, or LNG, pass through the Strait of Hormuz. This has reduced the volumes reaching Europe by about 5%.
The situation is even more difficult in Asia, increasing competition between European and Asian buyers for available LNG cargoes.
As in previous periods of tight supply, competition between Europe and Asia for LNG is pushing natural gas prices higher. Europe can secure the volumes it needs, but at costs reminiscent of the 2022 energy crisis.
At the same time, the European Union is approaching the final stage before a permanent ban on Russian imports, adding further pressure to the market.
A difficult outlook for winter
The increase in gas prices in recent months has had a particular impact on the European market.
Traditionally, energy importers seek lower prices during the summer and higher prices during the winter, creating an incentive to purchase and store gas ahead of the colder months.
The current situation has reversed that pattern, weakening the economic incentive to build up the volumes Europe needs in storage.
With oil prices rising amid geopolitical tensions and gas storage levels below normal for the season, European energy markets are entering the winter with significant pressure on both supply and prices.
