Gas Market
Gas markets surged in a volatile session on Tuesday, as escalating Middle East conflict and the loss of Qatari LNG production sent prices sharply higher. The front-month NBP contract hit an intra-day high of 171.21p/therm before settling at 140.99p/therm, a gain of 27.20p or 23.9% on the day. The Sum-26 contract also rallied strongly, rising 23.63p to 126.91p/therm. Further out along the curve, gains were more subdued, with limited additional risk premium priced in amid expectations that the conflict may prove temporary. The supply backdrop amplifies the severity of the disruption. EU gas storage sits at around 30% full, the lowest level for this time of year since 2022, leaving Europe with little flexibility to absorb a sustained interruption to LNG flows. With stocks already depleted by a cold winter, Europe faces a steep replenishment challenge heading into summer. Although Asian buyers take more than 80% of Qatar’s LNG exports, any reduction in Qatari output tightens the global supply pool, and Europe will face intensifying competition from Asian buyers to attract U.S. LNG cargo diversions.
Power Market
GB baseload power prices extended gains on Tuesday, tracking the ongoing rally at the NBP hub. The front-month contract settled £20.00 higher at £111.00/MWh, while far-curve contracts posted more moderate gains, with Winter-27 up £0.33 on the day. In the prompt market, downward revisions to wind output forecasts provided additional support, lifting the day-ahead 24.81% to £122.00/MWh.
Despite gas surging dramatically on the day, EU carbon prices recovered only modestly, underscoring that EUAs continue to trade on their own policy-driven logic rather than tracking short-term energy price moves. The persistent threat of ETS reform dilution remains the dominant influence on the market. The Dec-26 EUA contract settled at €73.33/tonne, up 3.9% on the day, its strongest daily gain in over two weeks.
Oil Market
Oil markets climbed higher on Tuesday, with geopolitical risk driving the sharpest single-day rally in months. Front-month Brent settled $3.66 higher at $81.40/bbl, a gain of 4.7% and the highest settlement since January 2025, compounding a 12% rise since the conflict began on Saturday. Prices were driven higher as intensifying U.S.–Israel military action against Iran disrupted energy shipments from the Middle East and stoked fears of a prolonged conflict. Israeli and U.S. forces struck targets across Iran on Tuesday, prompting Iranian retaliatory action across the Gulf, with the conflict also spreading to Lebanon. Iraq, OPEC’s second-largest producer, cut output by nearly 1.5 million barrels per day, with further cuts possible within days as storage capacity fills and export routes remain blocked. Iran has launched strikes against regional energy infrastructure and tankers in the Strait of Hormuz, through which approximately a fifth of global oil and LNG flows. Vessels are now avoiding the strait after insurers cancelled coverage, sending shipping rates sharply higher.
Markets This Morning
Energy markets are volatile this morning, although the pace of gains is slowing after U.S. President Trump suggested the U.S. Navy could escort vessels through the Strait of Hormuz and announced that the U.S. International Development Finance Corporation would provide political risk insurance and financial guarantees for maritime trade in the Gulf. Front-month NBP has swung between gains and losses, trading in a range of 136p to 145p/therm in the last hour, as markets weigh the potential for eased shipping disruption against the broader supply risk. Brent crude is trading at $82.33/bbl, up 93c on the day, consolidating yesterday’s sharp gains.
