ENERGY NEWSLETTER
The week ended with a military escalation between Israel and Iran that ignited global energy markets
🔴 ENERGY, CONFLICTS AND MARKETS: THE MIDDLE EAST KNOT AND OIL & GAS OUTLOOK
🔴 1. FRIDAY THE 13TH PANIC: OIL SURGES
The week ended with a military escalation between Israel and Iran that ignited global energy markets. WTI closed up +7.26% and hit intraday peaks of +11%, while Brent approached $78 per barrel. The spike was triggered by Israeli attacks on 100 Iranian targets, including nuclear infrastructure and high-ranking IRGC commanders. In response, Tehran launched dozens of ballistic missiles at Israel.
The uncertainty triggered a mass exit of CTAs (Commodity Trading Advisors), with oil RSI levels at 77 and OVX (oil volatility index) sharply rising, surpassing the VIX【15†friday_the_13th_panic__vol_explodes__oil_screams__ctas_wiped】.
🔴 2. STRAIT OF HORMUZ RISK: 20% OF GLOBAL OIL AT STAKE
Markets fear a possible blockade of the Strait of Hormuz, through which about 20% of global oil consumption transits. A forced closure would devastate energy flows and maritime insurance. According to Goldman Sachs, in a "tail risk" scenario involving prolonged disruption, Brent could surpass $100/barrel【13†Oil Comment_ Higher Risk Premium Near Term】.
In a more limited scenario, with Iranian exports reduced by 1.75 mb/d for six months and partially offset by Saudi Arabia and the UAE, prices could rise to $90/barrel before retreating to the $60s by 2026.
🔴 3. NATURAL GAS: BETWEEN US STRATEGY AND MIDDLE EAST SHOCKS
Natural gas rebounded +2.55% on Friday after four consecutive declines. Key drivers:
temporary shutdown of Israel's Leviathan gas field;
concerns over LNG transit through the Strait of Hormuz (20% of global LNG trade);
above-average US temperature forecasts for late June.
US dry gas production stands at 105.4 bcf/day (+3.2% y/y), while demand fell to 70.3 bcf/day (-5.2% y/y). Storage is +5.4% above the five-year average. Goldman Sachs expects NYMEX prices to exceed $3.90/mmBtu during the summer peak【14†What's Next in Gas】.
🔴 4. FUNDS AND ETFs: FLIGHT OR INFLOW?
Goldman Sachs' sales desk reports the third busiest trading day of 2025 for USO (United States Oil Fund), with inflows into XOP (exploration & production) totaling +$310 million over five days【10†GS ETF - Oil in Focus】.
This dynamic suggests a defensive energy exposure by investors, while futures indices (ES1) dropped -0.80% on Friday morning following the war news.
🔴 5. GS OUTLOOK: NO BLOCKADE, BUT A HOT SUMMER
Goldman Sachs maintains its base case forecast for 2026 at $56 Brent / $52 WTI, assuming no supply disruptions. However, the geopolitical risk premium has risen and could support prices in the short term ($63/barrel in Q3 2025)【13†Oil Comment_ Higher Risk Premium Near Term】.
The "Oil in Focus" note highlights that non-OPEC growth, except for US shale, will expand supply and limit price spikes. ETFs act more as monetary hedges than directional bets: their activity correlates more with newsflow than fundamentals【10†GS ETF - Oil in Focus】.
🔴 6. MIDDLE EAST IMPACTS: WHO GAINS, WHO LOSES
According to Goldman Sachs, repercussions on MENA countries depend on the conflict’s intensity and duration【12†Middle East_ Implications of Conflict with Iran on MENA Economies】:
GCC (Gulf): short-term beneficiaries from higher oil prices, but vulnerable to potential radioactive fallout or disruptions to tourism and logistics;
Egypt: exposed via three channels:
capital flows (foreign portfolio holdings: $20 billion);
energy balance deterioration (2024 external energy deficit: $11.2 billion);
Suez Canal revenues (-60% from peak due to Houthi attacks);
Lebanon: lower risk due to Hezbollah’s reduced military capacity post-2024 conflict.
🔴 7. EUROPEAN GAS: SECURE BUT ONLY 52% FULL STORAGE
European gas prices jumped over 6% after the attack. However, as of June 10, storage levels were only 52%, far below the five-year average of 62%. Israel temporarily halted supplies to Egypt via Leviathan. A hot summer and ongoing tensions may complicate replenishment.
🔴 8. ENERGY AND CLOUD: THE RWE-AWS DEAL
On the power side, RWE and Amazon Web Services signed a strategic agreement to supply carbon-free electricity to data centers, while AWS will support RWE’s digital transformation【11†GS Utilities Daily_ RWE_ French nuclear_ Outage could lift our 2025_26 EPS by c.+25 __ RWE and AWS signs strategic framework】.
Goldman estimates that a 10-20 GW French nuclear outage could boost RWE’s FlexGen earnings by €400–600 million, equivalent to +25% on 2025-26 EPS.
🔴 9. OPERATIONAL STRATEGIES: WHAT TO DO NOW
Goldman Sachs suggests:
buying crude puts (or put spreads) to hedge downside risks;
selling calls to benefit from elevated implied volatility;
avoiding breakouts unless there’s visibility on permanent damage to Iranian infrastructure.
Positioning remains key: short CTAs were "wiped out" Friday, and many managers are forced to rebalance. This is a market driven more by headlines than demand/supply fundamentals【15†friday_the_13th_panic__vol_explodes__oil_screams__ctas_wiped】.