Energy markets are under pressure as a fresh escalation of attacks between the US and Iran has brought the Strait of Hormuz back into focus, causing gas, oil, and other commodity prices to rally. Negotiations between the US and Iran have stalled, and with Europe nearing the end of summer, diminishing gas storage levels are expected to intensify the global competition for energy supplies. Governments and consumers are now facing the prospect of higher prices as winter approaches.
The renewed hostilities have led to oil heading for its largest weekly gain since July, with West Texas Intermediate rising towards $92 a barrel and up over 9% for the week. Brent crude settled below $96 in the previous trading session. This flare-up follows a period of relative calm, with US bombing campaigns met by Iranian retaliation against American bases in the region.
European natural gas is also on track for its fourth consecutive weekly gain due to the renewed fighting in the Middle East, which has heightened concerns about prolonged supply disruptions and winter fuel inventories. Benchmark futures, despite some fluctuations, were up more than 7% for the week. Both European and Asian gas prices have reached their highest levels in over three years as the US and Iran have intensified their tit-for-tat military strikes.
Adding to the global energy strain, US diesel prices have climbed to their highest level since April, reaching $5.688 a gallon nationwide. This is slightly below the April peak during the initial phase of the US-Iran war and not far from the record $5.816 set in mid-2022 during the energy crisis triggered by Russia's invasion of Ukraine. US Treasury Secretary Scott Bessent has attributed rising global energy prices to both Ukrainian drone strikes on Russian energy facilities and the ongoing conflict with Iran.
