Oil markets are reflecting the turmoil in the Middle East, as United States President Donald Trump dismissed Iran’s proposal for peace, while Houthi attacks have been bolstering fears of longer disruptions. Brent futures are changing hands at nearly USD 109 per barrel, inching toward the peak reached in May. At the same time, Western Europe is bracing for the possibility that the administration in Washington DC bans diesel exports in the runup to the US midterm elections.
The price of the benchmark futures contract for Brent oil climbed to almost USD 109 per barrel today, testing the highest levels since May. It spent most of the past three weeks above USD 100 per barrel, though with several intraday swings below and above the psychological threshold. Conversely, West Texas Intermediate (WTI) oil peaked at under USD 96.5 per barrel in the current session.
Surging Brent prices, paired by a strong increase in gas prices, are a concern for large consumers among countries and companies due to the risk of recession and financial losses.
But it is diesel fuel that has triggered the most immediate crisis. Shortages and retail price spikes in Europe worsened with Ukraine’s drone bombing of refineries in Russia, as well as threats by United States President Donald Trump that his administration would block exports of the fuel. Such a measure would be devastating for Western Europe and beyond.
Trump weakens hope for peace
The latest jump in oil coincided with another statement from Trump. Namely, he rejected Iran’s plan for ending hostilities throughout the Middle East and reopening the Hormuz strait. It has been the central point of blocade for oil and commodities coming from the Persian Gulf, since the US and Israel attacked Iran on February 28.
Trump did express willingness to continue peace negotiations, but according to unconfirmed reports, he has told his associates that he expects airstrikes on Iran to continue after the US midterm elections, scheduled for November 3. Retail fuel prices are usually among the major factors for voters, and a halt in diesel exports could result in a short-term drop.
Houthi rebels keeping oil supply uncertainty high
Fears of disruptions in the supply of oil from the Persian Gulf are also caused by attacks on Saudi Arabian pipelines and other infrastructure by rebel Houthis from neighboring Yemen.
Dutch TTF gas traded at EUR 73.77 per MWh in the early afternoon. On September 14, the European benchmark closed at EUR 82.57 per MWh, a level unseen since December 2022.
