Gas Market
NBP curve prices extended Wednesday’s gains yesterday, supported once again by concerns over a potential military confrontation between the U.S. and Iran. Market participants are closely tracking the evolving geopolitical situation, which has injected significant risk premium into prices over the past two sessions amid fears that escalation could lead to the closure of the Strait of Hormuz – a critical shipping route through which around one-fifth of global LNG trade passes each year. Given Europe’s heavy reliance on LNG imports, any disruption to flows through this corridor could pose a material supply risk. However, despite the prevailing geopolitical uncertainty, supply to the U.K. remains robust in the near term, with nine LNG cargoes currently scheduled to arrive before the end of the month. The front month contract gained 5.66p by the close to settle at 82.07p per therm, still 3.6% lower than the highest close of the month so far. Meanwhile, the curve’s upside filtered into the prompt despite a bearish weather outlook, with the Day ahead contract increasing by 3.65p to close at 80.40p per therm.
Power Market
With the NBP gas market gaining upward momentum amid further escalation of U.S.-Iran tensions on Thursday, GB Baseload curve contracts followed suit. The front month contract increased by £2.93/MWh to close at $75.93/MWh. The prompt market was largely flat, with forecasts of above-average temperatures and strong wind output from early next week providing a robust supply outlook. The Day ahead contract fell back by the close to settle at a £0.40/MWh discount to its previous close.
Modest losses were seen across European carbon markets on Wednesday, despite the upside exhibited by the wider energy complex due to the latest geopolitical developments in the Middle East. European Allowances for Dec 26 shed €0.11 day-on-day to settle at €71.41 a tonne.
Oil Market
Oil prices climbed to a six-month high on Thursday, fuelled by mounting concerns over a potential military confrontation between the U.S. and Iran. President Trump warned on Thursday that Iran must make a deal over its nuclear program and suggested a 10-day deadline before the U.S. might take action. With roughly 20% of the world’s oil supply transiting through the Strait of Hormuz each year, any escalation in geopolitical tensions could prompt Iran to close this vital shipping corridor, potentially triggering significant global supply disruptions. As a result, the front month Brent contract rose by $1.31 day-on-day to settle at $71.66 a barrel, its highest close since the end of July 2025 and a 6.3% increase over the past two sessions. West Texas Intermediate (WTI) crude mirrored Brent’s upward movement with the March contract increasing by $1.24 to close the session at $66.43 a barrel.
Markets this morning
The NBP curve has retreated back from yesterday’s highs despite there being no clear easing or de-escalation of tensions between the U.S and Iran. The front month contract last went through at 79.25p per therm, down 2.72p on yesterday’s close. While prompt activity is yet to get going, forecasts for warmer than previously expected weather from Monday should mitigate potential gains. Meanwhile, oil markets are down slightly so far but continue to hover close to 6-month highs over growing concerns that a conflict may erupt in the Middle East. The front month Brent contract last went through at $71.22 a barrel, down 44 cents on its previous close.
