Global energy markets face divergence in oil and gas prices

The global energy market is experiencing a significant divergence between crude oil and refined product prices. Patrick Pouyanne, CEO of TotalEnergies, noted that while crude oil markets remain bearish, prices for refined products are rising. This trend is driven by high transportation costs through the Strait of Hormuz and reduced fuel supplies from Russia due to drone attacks on refineries.

Wael Sawan, CEO of Shell, highlighted a “triple threat” to refined product markets: attacks on Russian refineries, navigation hazards in the Red Sea, and dangers in the Persian Gulf.

Simultaneously, European natural gas prices have reached recent highs, driven by competition from Asian buyers diverting liquefied natural gas (LNG) shipments away from Europe. European storage levels remain critically low, with Germany at approximately 50 percent capacity. Demand is further pressured by the energy needs of major technology companies, including SpaceX, Meta, and Microsoft, which are expanding operations to power data centers and semiconductor manufacturing.