Gas Market
European gas prices moved lower on Tuesday as traders reacted to comments from U.S. President Donald Trump suggesting the conflict with Iran could conclude “pretty quickly,” easing some concerns about prolonged disruption to energy flows. The NBP front-month contract opened at 123.66p/th, down 19.87p from Monday’s close, as the market began pricing in the possibility of a faster resolution to the crisis, before settling at 120.63p/th. Sentiment was also supported by expectations that LNG tanker traffic through the Strait of Hormuz could resume after the EU signalled on Monday plans to deploy naval forces to help safeguard shipping routes and limit inflationary pressure from rising energy costs. Despite ongoing uncertainty, volatility moderated compared with the previous session, with the front-month contract trading within an 11.6p range on Tuesday versus a much wider 28.31p swing on Monday, as participants reassessed the likelihood that the conflict could begin to de-escalate.
Power Market
GB baseload power prices moved lower on Tuesday, reversing the previous gains as contracts across the curve declined, tracking losses in the NBP gas market despite a modest rise in carbon prices. The front-season Summer-26 contract fell by £12.13/MWh, broadly following the 20.60p/th drop in the equivalent NBP gas contract. The wider energy complex was reacting to comments from U.S. President Donald Trump suggesting the conflict in the Middle East could end “very soon,” easing some of the geopolitical risk premium.
EUA carbon contracts moved higher following comments from U.S. President Donald Trump, broadly tracking gains in equity markets, although the advance was more measured as uncertainty around potential reforms to the EU Emissions Trading System (ETS) continues to weigh on sentiment.
Oil Market
Brent crude fell sharply on Tuesday, settling at $87.80/bbl after losing just over 11% in its steepest one-day decline since 2022, as traders reacted to signals that the conflict involving Iran could de-escalate and that oil shipments through the Strait of Hormuz may resume. The drop followed a surge to four-year highs above $119/bbl a day earlier, when fears of severe supply disruptions dominated sentiment. Markets shifted focus after comments from U.S. officials suggested military escorts had helped restore tanker movements and after indications from Washington and Moscow that diplomatic efforts to end the conflict were advancing. While significant refining outages and regional disruptions persist, some participants believe policy options such as potential strategic reserve releases or changes to sanctions could help keep barrels flowing. Even so, analysts caution that if production sites remain offline for extended periods, restoring supply chains and output could still take weeks.
Markets this morning
NBP gas prices have traded modestly higher in early exchanges, while crude oil continues to trade at a premium to Tuesday’s settlement. Despite upbeat rhetoric from the U.S., market caution remains. Reports indicate the U.S. has eliminated 16 Iranian mine-laying vessels near the Strait of Hormuz, raising the possibility that mines may already be present in the vital shipping lane and will need to be cleared. Meanwhile, the International Energy Agency has recommended its largest-ever release of oil reserves to help mitigate potential disruptions to global supply.
