A massive fuel crisis has begun in the West — Macron urgently convenes a G7 summit

The global energy market and Western capitals have faced one of the most dangerous and unprecedented economic shocks in recent years. Leaving oil and gas issues aside for the time being, US and European leaders have entered a true state of emergency due to record hikes in diesel prices at petrol stations. The situation has become so perilous that French President Emmanuel Macron is urgently summoning the leaders of the Group of Seven (G7) nations to agree on releasing and selling the next batch of fuel from strategic reserves, which have thinned out significantly since the military conflict around Iran began.

Speaking to the influential American newspaper The Wall Street Journal, executives of the largest oil corporations frankly admitted the truth: a global major fuel crisis has already begun. Although Brent crude appears stable around $104.4 on exchange quotes, in the real physical market, the raw material barrel has surged to $130–150, while Russian oil is selling for over $100.

So, how did the shutdown of Saudi Arabia's oil pipeline strike the global market, to what extent has the "oil hunt" among European and Asian refineries escalated, and will the upcoming winter season bring Western industry to its knees?

"$150 physical delivery and the Aramco restriction": The explosion in the oil market

The most important figures and events of the past week in the international energy market:

• The chasm between the exchange and the real market: Although the price of Brent crude jumped to $109 on the exchange and returned to $104.4 by the end of the week, real physical delivery prices reached $130–150;

• Russian oil has become more expensive: Despite international restrictions, Russian crude is valued at over $100 on the market;

• The halt of the "East–West" pipeline: The disabling of three pumping stations by the Houthis on the main trunk line delivering Saudi oil bypassing the Strait of Hormuz has severed the supply chain;

• Warning from Aramco: The Saudi state giant announced it would suspend exports to certain European clients in September and October; Poland's "Orlen" company was immediately forced to purchase 15 alternative tankers from the market;

• Small tanker tactics: To ease market panic, the Saudis are building a new route bypassing the damaged pipelines and offered traders 60 million barrels via the Strait of Hormuz for September-October.

"The situation in the gas and coal market": Europe's pre-winter anxiety

The European Union's status regarding other energy resources:

• Exchange gas price: Futures a month ago at the Dutch TTF hub decreased slightly from $972 to $963 per thousand cubic meters;

• LNG deficit and Asian competition: Liquefied natural gas (LNG) imports are significantly lower compared to last September; because global volume is not increasing, Asian countries are aggressively competing with Europe;

• Germany's hard lot: The reserves burned in Berlin last winter have not yet been replenished, and the government is in no hurry to fully intervene in the market and issue new subsidies;

• Coal has become cheaper: The price of coal delivery at the ARA (Antwerp-Rotterdam-Amsterdam) hub dropped from $140 to $135.9 per ton.

Energy analysis: Experts on the diesel crisis

Conclusions of international financial organizations and experts:

• "Middle East tension pressure": UBS analyst Giovanni Staunovo noted that attacks on tankers in the Strait of Hormuz are the main geopolitical factor keeping oil prices artificially high;

• Will physical supply normalize?: According to Priyanka Sachdeva, head of research at Phillip Nova, if vessel traffic in the Strait of Hormuz stabilizes, the "geopolitical premium" in prices may drop, otherwise the crisis will deepen further;

• Disastrous diesel for the economy: The rise in the price of diesel fuel directly increases shipping and logistics costs — which will flare up inflation in Europe and the US with renewed force;

• Hope for a mild winter: European officials are currently pinning their hopes solely on nature's gift — a mild coming winter; if the frost is severe, an energy collapse will be inevitable.

The urgent convening of the G7 summit and warnings from major oil barons show that the Western economy is entering the most dangerous phase of the fuel crisis.

In your opinion, will the Group of Seven nations be able to halt the rise in diesel and oil prices by opening their depleting strategic reserves, or will prices exceed $150 due to the war in the Middle East? Do you think Europe will make it through this year's winter without serious economic losses? Leave your analytical thoughts in the comments and share this alarming analysis of the global economy with all your loved ones and business friends!