🌍 Energy Market Update

Oil & Gas Prices Climb Amid Geopolitical Tensions and Summer Demand

Crude oil prices have risen following renewed tensions in the Middle East. Yemen’s Houthi rebels launched a deadly attack on a Liberian-flagged cargo ship in the Red Sea, tragically killing at least two crew members and disabling the vessel. This incident has reignited fears that Iranian-backed militant groups may escalate efforts to disrupt oil tanker traffic in the region.

The Bab el-Mandeb Strait remains a chokepoint, with tanker traffic still suppressed after a sharp decline in late 2023 due to earlier attacks. Tensions escalated further after Iranian Foreign Minister Abbas Araghchi wrote in the Financial Times expressing deep skepticism about further dialogue with the US.

Despite these developments, oil prices have remained relatively buoyant—even after OPEC’s decision to increase production by 548,000 barrels per day in August. This resilience points to a tightening physical oil market, underlining the delicate supply-demand balance currently at play.

Meanwhile, European gas markets have surged as extreme summer heat boosts expectations of elevated energy demand. High temperatures are already straining nuclear power generation, with potential curtailments looming. In Asia, China’s record-breaking power usage—peaking at 1.47 billion kW on 4 July—hasn’t yet translated into increased spot LNG purchases, despite the NEA projecting a 100 GW rise in peak demand this summer compared to last year. Encouragingly, some of this additional demand is being absorbed by renewable sources.

📩 Please contact hello@gleg.co.uk for a more detailed market analysis and expert view on how to navigate your energy procurement strategy through the current market volatility.