Gas Market
NBP prices extended gains on Thursday after Iran’s newly appointed Supreme Leader Mojtaba Khamenei delivered his first public statement, vowing to keep the Strait of Hormuz closed as a “lever of pressure.” Reports of tanker attacks in the Gulf heightened fears of prolonged disruption to regional LNG supplies, while elevated oil prices provided further support, pushing market risk deeper along the curve. The prolonged absence of Qatari supply continues to tighten the European summer injection outlook, raising the prospect of lower storage heading into winter and driving risk into Q3 and the oncoming winter delivery period. Q3 26 gained 3.63p to 120.50p/therm and Winter 26 rose 4.31p to 120.90p/therm, while the front-month settled 2.09p higher at 129.35p/therm. Prompt gains were capped by an upward revision to temperature forecasts, with above seasonal norms expected next week weighing on heating demand and limiting the day-ahead rise to 2.80p, settling at 125.30p/therm.
Power Market
GB baseload power prices extended gains on Thursday, tracking the ongoing rally at the NBP. The front-month contract settled £2.00 higher at £98.00/MWh, while Winter 26 rose £4.31 to £120.80/MWh as market risk was pushed further along the curve amid prolonged disruption to LNG lanes through the Strait of Hormuz. In the prompt market, temperatures forecast well above seasonal norms for next week are expected to weigh on gas-for-power demand, pulling day-ahead down 5.49% to £56.00/MWh.
The Dec-26 EUA contract fell sharply on Thursday, settling down 4.4% at €68.73/tonne. Selling accelerated through the afternoon as rumours circulated that the European Commission is considering expanding free allocation under the ETS Review to ease the cost burden on industry.
Oil Market
Oil prices surged on Thursday, settling up around 9% at their highest level in nearly four years, as Iran escalated attacks on oil and transport infrastructure across the Middle East and the country’s supreme leader vowed to keep the Strait of Hormuz closed. Front-month Brent crude settled at $100.46 a barrel, up $8.48 or 9.2% on the day, having touched a session high of $101.60, while WTI crude settled at $95.70, also up $8.48 or 9.7%. Both contracts closed at their highest since August 2022. Two fuel tankers in Iraqi waters were struck by Iran yesterday, with Iraq reporting that the country’s oil ports have completely stopped operations. Gulf producers have collectively cut output by at least 10 million barrels per day since the start of the war, roughly 10% of global demand. Despite the scale of those cuts, the IEA still expects world oil supply to outpace demand in 2026, though it has revised its outlook sharply lower. Global supply growth was revised downward by 1.3 million bpd, leaving the IEA’s implied supply surplus at 2.46 million bpd, down from the 3.73 million bpd surplus forecast in its previous report.
Markets This Morning
Energy markets are relatively steady this morning following two weeks of sharp volatility across global oil and gas markets. Prices remain elevated as geopolitical tensions continue to weigh on supply chains, though the pace of gains has eased. The NBP front-month is down 0.51p at 128.84p/therm, while front-month Brent is broadly flat, up 60c at $101.06/bbl. The stabilisation in oil prices follows news that the United States issued a 30-day waiver allowing countries to purchase sanctioned Russian oil and petroleum products currently stranded at sea. Treasury Secretary Scott Bessent described the move as a step to stabilise global energy markets disrupted by the Iran war. The EU has pushed back, reiterating that now is not the time to ease sanctions on Russia.
