Oil and gas prices are once again on a roller coaster. In the wake of the Republicans’ electoral rout and after an initial sharp fall, they turned higher in markets yesterday.
At the same time, nothing indicates what the US president will do next: whether he will escalate the situation further, now free of political pressure to keep fuel prices down in the US market, or whether the “blue wave” in the US Congress will make him more conciliatory and lead him to seek a peace deal with the Iranians.
Against this backdrop, speculation is once again setting the tone in markets, with the familiar “roller coaster” ride. The fundamentals of the crisis have not changed at all, yet prices are rising and falling like a lift.
In less than 48 hours, the price of oil fell from $104 a barrel to $94, before climbing back above $98 yesterday — a sign of the extent of the uncertainty.
In the natural gas market, with no change in US policy on the war in the Persian Gulf, prices fell from €103 to €84 before rising again to €90/MWh yesterday.
These moves are nothing more than funds’ activity, as they rush to exploit the situation and the rumours to make quick profits, with nothing having changed in the energy crisis itself, Greek and international analysts say.
“Supply problems — whether they concern the safe passage of ships in the Persian Gulf, Russia’s ability to increase exports, or a reduction in freight rates and insurance premiums — will not change simply because of the election results.
That will take time, as the market’s reaction shows. So we are in a wait-and-see mode and cannot draw reliable conclusions — not only about the longer term, but even the short term.
We will see a slight easing in prices in the Greek market over the next 2–3 days, but that is all; we should not expect anything more dramatic,” Yannis Aligizakis, president of the Association of Petroleum Product Trading Companies, told Euro2day.gr.
Prices at the pump
Asked what households and businesses will see at the pump in the coming days, the answer is that from the weekend onwards, barring any dramatic reversal, drivers will save around 10–11 cents per litre at the pump.
Both petrol and diesel are expected to fall to close to €2 a litre, from €2.11 and €2.13 respectively, the nationwide averages based on the latest price survey. Those ordering heating oil could save close to 50 cents per litre, as the price is expected to fall from €1.56 to €1.50 a litre.
But the picture is highly fluid.
“Today (Wednesday), I spoke to more than 20 traders and analysts to gauge the market’s reaction to the midterm election results.
The majority of those questioned said Trump — now free of the need to keep prices low or control public opinion — will escalate the situation further.
I believe he will step up his actions before the new Senate and House of Representatives take office (in early 2027). “He’s like a wounded lion now,” one of them said, while many others pointed out that, if he “has nothing to lose”, he is likely to escalate further, the well-known ICIS analyst Brendan A’Hearn said in a post.
Questions about what comes next
There is, of course, another way of reading the situation. Some believe that next week’s Russia-US-Ukraine summit could restrain an immediate response, while the arrival of a third aircraft carrier in the Gulf could also cause a temporary delay.
Others argue that Trump will not launch extreme attacks, as Gulf states are likely to exert strong pressure in that direction. In turn, he will limit himself to continuing the blockade, economically strangling Iran. That, however, would mean that the unimpeded flow of LNG through the Strait of Hormuz remains impossible and the war is prolonged. It would therefore also favour higher prices, albeit for a different reason than a direct escalation involving military operations.
Other analysts take a different view, arguing that the “blue wave” in the US Congress, with Democrats taking control of both chambers — the Senate and the House of Representatives — will curb any inclination Trump may have to expand the war, even though this will not happen until early 2027.
Congress may, however, gain leverage, but it does not control the war. Although Democrats will be able to push for decisions concerning military operations and their economic consequences, they will not be able to end the war unilaterally.
Nor can they impose an agreement with Tehran...