A Decline Fueled by Expectations

On Wednesday, Brent fell from above $117 to below $95 a barrel. It thus dropped nearly 20% over the week. On Thursday, it rebounded 1.60% to $96.12, while December WTI gained 0.76% to $88.81. The trigger is political: the Democratic victory in Congress fuels hope that Washington will seek a negotiated solution with Iran. The risk premium is therefore compressing on the sole basis of an expectation.

Physical Markets Don't Follow

The recovery of Middle East crude exports has not been matched by an equivalent improvement in refined fuel supply. Absent a peace agreement, the market remains exposed to binary risks: a favorable diplomatic signal sends prices tumbling, an unfavorable one can lift them just as fast. This fragility explains why the decline could stop dead around $95.

Capital Votes for Security

IEA Executive Director Fatih Birol warns that markets will not return to pre-war conditions in 2027. Global energy investment should reach $3.4 trillion in 2026, up 5% from 2025. Clean technologies, nuclear, storage and grids capture $2.2 trillion, versus $1.2 trillion for fossil extraction. About 90 GW of nuclear is under construction, a multi-decade high. The European Union should invest $440 billion, betting on diversification and electrification, with LNG remaining a pillar of supply security.

Mixed Signals on European Markets

Traders are capitalizing on these tensions. Engie posted EBIT excluding nuclear of €7 billion for January-September and targets the top of its 2026 range of €9.2 to €10.2 billion. Its CFO cites favorable market conditions in electricity. The trade-off exists, however: rising energy commodity costs weigh on net debt, through margin calls and gas storage replenishment.

Electricity prices remain high in several zones. On October 30, day-ahead stood at €254.14/MWh in Switzerland, €250.85 in the Czech Republic, €250.56 in Denmark-1 and €211.19 in Portugal, versus €77.51 in Finland. A spread of one to more than three reflects persistent local constraints.

Limits of the Analysis

The crude rally's easing rests on expectations: nothing confirms an agreement. Gas data also call for caution. The entry flow at Emden (Norway-Germany) drops from 402.5 million kWh/d on October 30 to 77.6 million on October 31, but the latter figure may be partial. Finally, the file contains no long price series, nor inventory or refining margin data.

A Proportionate Conclusion

Available evidence suggests the market has not so much resolved the crisis as priced in its exit. Supply constraints and regional electricity tensions persist, and the shift of investment toward supply security appears structural. The price trajectory, for its part, will depend first on the diplomatic outcome.

This article was written with the assistance of artificial intelligence and verified by our editorial team.