Key facts
- Crude oil prices expected to remain elevated due to supply and shipping concerns.
- Refined products, especially diesel, carry significant inflation risk.
- Europe's natural gas prices are approaching €100/MWh amid rising heating demand.
- Europe is drawing down natural gas storage for the first time this season.
- Competition for LNG cargoes between Europe and Asia is intensifying.
Middle East nations are renewing diplomatic efforts to de-escalate tensions, with delegations from Saudi Arabia, Turkey, and Pakistan meeting Iranian officials in Tehran. While Iran's President Pezeshkian is open to resolving differences, Tehran insists U.S. sanctions and port blockades must be addressed first. Standard Chartered anticipates that while a regional agreement could reduce geopolitical risk premiums on oil, prices will remain high until shipping lanes are secure and Gulf supply is reliably restored. The bank noted that even as diplomatic talks occurred, the Houthis claimed attacks on Saudi Arabia’s East-West pipeline, though damage is unverified. This backdrop suggests elevated crude prices in the coming months, driven by the pace of Gulf supply recovery. Refined products, particularly diesel, pose a significant inflation risk beyond the crude market.