Direct military clashes between US and Iranian forces in the Middle East have triggered a sharp spike in European natural gas prices to their highest levels since 2023. This energy market panic coincides with a severe fuel supply squeeze in Russia and growing debates over Armenia’s economic integration.
Global market
European natural gas prices jumped 5% on Monday, with the benchmark Dutch TTF front-month contract topping 70 euros ($81.20) per megawatt-hour, its highest level since late 2023. The sudden price spike was triggered by fears over Middle Eastern liquefied natural gas (LNG) supplies following US and Iranian strikes in the Strait of Hormuz. In response to rising oil profits and fiscal pressures, UK Chancellor John Healey received a proposal to increase windfall taxes on energy firms to rebuild an eroded 22.7 billion pound fiscal buffer. Meanwhile, industrial commodity pressures intensified as Chinese coking coal futures on the Dalian exchange surged 6% on Monday, capping a record 46% monthly rise in August.
Russia & CIS
Russian petrol production fell to 70% of domestic demand in late August, averaging approximately 90,000 tonnes per day, according to Reuters. This domestic fuel squeeze was worsened as Belarusian petrol sales on the Saint Petersburg exchange collapsed fourfold in August to 26.04 thousand tonnes compared to July. To counter regional fuel shortages, Kaluga Governor Vladislav Shapsha announced the complete cancellation of the even-odd fuel rationing system at local stations starting September 1. Meanwhile, Russia’s Ministry of Energy stressed that the country must maintain an annual oil production potential of 540 to 560 million tonnes, while Aeroflot reported that fuel costs surged 24.5% in the second quarter to 92.2 billion rubles.
Armenia
A potential exit of Armenia from the EAEU would hit the export of three major product categories hardest, according to a recent analytical study. This economic warning comes as retail petrol, diesel, and natural gas tariffs in Armenia remained completely stable on August 31. The republic’s energy market continues to be heavily insulated by its integration within the EAEU. Strategic bilateral treaties with Moscow guarantee the uninterrupted, duty-free import of Russian natural gas and petroleum products at long-term fixed rates. This non-market framework fully shields Armenian consumers and local utility pricing from the high volatility recorded in international market price assessments.