Energy prices surge again as oil nears $110 and the impact spreads to electric cars amid fears of a full-blown war in the Middle East
Fuel prices surged for the second consecutive day, with Brent crude nearing $110 a barrel on Friday night, after reaching $109.97, its highest level in four months, before later settling back to around $107. Brent crude rose by approximately 111 TP3T in a single week, amid escalating fears of a wider conflict in the Middle East. A report by TV2 suggested that this surge may be linked to concerns about a full-blown war between the Houthis in Yemen and Saudi Arabia, as well as the ongoing tensions between the United States and Iran.
This increase in energy prices follows a surge in gasoline prices on Thursday, as fuel and gas prices continued to rise due to energy market turmoil linked to the war and geopolitical tensions. Recent data from FDM shows that gasoline and diesel prices in Denmark have risen sharply since the start of the war in Iran, and that if prices remain at their current levels, they could add thousands of kroner to household expenses this year.
Oil nears four-month high
The movement of Brent crude in recent hours demonstrated how quickly the oil market is affected by military developments. The price briefly surpassed $109 before falling back to around $107 per barrel, but remained high enough to push crude's gains for the week to around $111 TP3T.
A TV2 report suggests that developments in the Middle East are the primary driver behind the price surge, with growing fears that the conflict could escalate into a full-blown war. This comes at a time when the ongoing US-Iran conflict continues to weigh on markets, alongside concerns about the situations in Yemen and Saudi Arabia.
Diesel hits record high price
These developments come after diesel prices in Denmark reached a new record high. According to calculations by the FDM (Danish Automobile Owners' Association), the price of a liter of diesel reached 18.49 kroner at unmanned gas stations and 18.59 kroner at manned stations, the highest price ever paid by diesel drivers at the pump.
FDM consumer economist Ilyas Dogru said that this level represents the highest nominal price diesel has reached, while it becomes the highest level since 2022 when accounting for inflation and changes in taxes and fees.
Dogru explained that gasoline and diesel are currently following different paths in the market, as the price of gasoline fell by 40 euros on the same day, while diesel continued to rise.
Demand for diesel is facing a tighter market.
Dogru attributed the difference between the two fuels to the fact that the diesel market is tighter, due to low inventories and pressure on refining capacities, in addition to the fact that uncertainty in the Middle East is directly impacting the refined fuel market.
According to FDM’s assessment, these factors could push the price of diesel higher even when the price of crude oil is falling, because the market depends not only on the price of crude but also on the availability of refined petroleum products and the ability of refineries to meet demand.
FDM had previously warned that rising fuel prices linked to the war in the Middle East were beginning to have a clear impact on Danish household budgets. Its calculations indicate that a family using a petrol or diesel car for long distances could face thousands of kroner in additional expenses if current prices persist.
European gas enters a new record area
The pressure wasn't limited to oil and fuels; European natural gas prices also continued to rise. According to TV2 data cited in the report, the price per megawatt-hour of gas on the European market reached approximately €82, a level significantly higher than the price recorded a year ago, when it was around €30, and exceeding the price levels seen in Europe since the 2002 energy crisis.
Recent European market data confirms that gas prices have already exceeded the 70 euro per megawatt-hour mark at the beginning of September, while European stocks have approached 651 TP3T, compared to an average of approximately 821 TP3T in previous years, increasing the market's sensitivity to any new disruption in supplies as winter approaches.
The war in Ukraine is adding new pressure to the gas market.
According to TV 2, citing the Wall Street Journal, the war in Ukraine has re-emerged as an additional factor putting pressure on the gas market, after Ukraine carried out a drone attack targeting a gas field in Siberia.
This comes at a time when Europe is already facing a more sensitive market due to disruptions in liquefied natural gas supplies from the Gulf region and lower-than-usual storage levels, which means that any military development or supply disruption could push prices to higher levels.
Rising energy costs threaten to fuel inflation
The repercussions of rising oil and gas prices extend far beyond the cost of filling a car tank or energy bills; the increases can ripple through broad sectors of the economy. Higher oil prices drive up transportation and production costs, while gas directly impacts industries that rely on it and electricity costs during periods when the European energy system requires increased gas supply.
Recent analyses have warned that if gas prices remain at high levels for an extended period, it could put particular pressure on sectors such as chemicals, fertilizers, metals, and building materials.
Fuel prices have become an increasing burden on drivers.
FDM explains that petrol and diesel prices are significantly higher than they were a few months ago, after the war and attacks on Iran led to a surge in oil prices, which was then reflected in fuel prices at Danish filling stations. The organization estimates that drivers who travel approximately 20,000 kilometers or more annually could face an increase of between 4,000 and 5,000 kroner in their fuel expenses if current price levels remain constant.
In an effort to mitigate the impact of rising commuting costs, the Danish government has increased the commuting allowance and the tax credit associated with going to work for 2026. FDM says the increase could save many beneficiaries between around 1,000 and 3,000 kroner, depending on the distance and place of residence.
Electric cars are also facing the effects of the energy crisis.
The rise in petrol and diesel prices does not mean that electric cars are entirely immune to the effects of the energy crisis. FDM pointed out that electric car drivers benefited during the summer from abundant wind and solar power, which helped keep electricity prices low for many hours, but the European electricity grid's reliance on natural gas complicates the picture as winter approaches.
FDM anticipates that the cost of charging electric vehicles will become more sensitive to gas prices at certain times, particularly when wind and solar power are insufficient. Furthermore, Denmark's winter grid tariffs begin to rise in October, potentially making the timing of charging even more critical for consumers.
Markets are watching closely to see what the war will do to energy prices.
This escalation in energy prices comes at a time when European markets are facing a combination of pressures: rising oil and gas prices, declining storage levels, uncertainty about liquefied natural gas supplies, and the ongoing war and tensions in the Middle East and the war in Ukraine.
As winter approaches, Europe's ability to secure sufficient gas reserves becomes a crucial factor in determining price direction. Recent market analyses suggest that continued supply disruptions related to the Gulf region could keep gas prices above their usual levels, while any improvement in supply routes could ease pressure on the market.
The recent surge in oil, diesel, and gas prices reveals that the developments of the war are no longer a geopolitical issue far removed from daily life, but have begun to directly impact the cost of transportation, heating, electricity, and production. Meanwhile, the direction of energy prices in the coming period remains largely dependent on the course of the war and the possibilities of its expansion or containment.
