In a state of heightened uncertainty, international energy markets are following growing threats to block the Seaway of Hormuz, one of the world’s most strategic shipping and energy channels.

Any disruption or restriction of shipping in the region will cause a chain of oil and LNG price increases, with direct consequences for the Greek fuel and electricity market as well.

Approximately 20 million barrels of crude oil are handled daily passing through the Strait of Hormuz every day and 20% of the LNG. If Iran succeeds in blocking the access of giant tankers from the region, there will be dramatic effects on fuel prices, which will be felt due to international energy costs.

The price of gas in the TTF now incorporates a geopolitical risk premium and, in a matter of days, has climbed above 40 euros MWh, with analysts warning of further rises if there is an escalation in shipping through the Strait of Hormuz.

At the same time, the Brent price closed on Friday June 20 at $77 a barrel heading full speed towards $80 while the wholesale electricity price is on an upward trajectory, which for today June 23 on the energy exchange for Greece jumped 56.74% to 91.62 euros per megawatt hour from 81.94 euros per megawatt hour which was the average price in May, intensifying the pressure on energy suppliers.

Today, the imbalance between the countries of South-Eastern and Central Europe is returning to the European price map. Indicative is the price picture in the French market, which stands at 26.8 EUR/MWh, in Germany at 38.74 EUR/MWh, and in Belgium at 38.36 EUR/MWh. In contrast to the markets of Greece at 92.18 euros, Romania and Bulgaria at 97.18 euros, and Hungary at 94.89 euros, prices are escalating in the European south with Italy at 138.16 euros/MWh, Spain and Portugal at 110.56 euros/MWh.

Environment and Energy Minister Stavros Papastavrou last week spoke of “an energy curtain that threatens the cohesion of the EU and strengthens populist voices”, noting that for the first time the problem is being institutionally recognised at the level of the Council of Ministers with the creation of a task force that is expected to meet for the first time by the end of the month.

Tariff escalation

As we enter the last week of June, providers are adjusting their electricity tariffs for the coming month as they enter a phase of price increases. The reason is that they will incorporate the strengthening of the wholesale market and the uncertainty stemming from the unpredictable international factor. The burden is greater for households with variable tariffs, which are directly affected by fluctuations in energy costs, while consumers who have opted for fixed electricity tariffs should not be worried at all.

International price rises have already started to be reflected at petrol stations, with the price of unleaded and diesel already having risen, and forecasts suggesting a bigger increase in the coming days.

So far, the increases seen since the start of hostilities until the middle of last week, although not excessive, are not negligible, as they were 18 euros a cubic meter for petrol and 36 euros a cubic meter for diesel. Estimates speak of a price rise from today, reflecting the stormy developments of the last few days, with petrol expected to rise by 1.4 cents per litre and around 3 cents per litre for diesel.

Oil market executives stress that the decision to close the Strait of Hormuz will send oil prices soaring (as high as $130 a barrel under JPMorgan’s worst-case scenario), a disastrous development for Iran, which exports 4 million barrels a day, of which 3.5 million go to China.