Gas Market
There was another volatile session for the energy markets on Wednesday after Israel targeted Iran’s South Pars gas field. Damage was caused to facilities at the world’s largest gas field and Iran promised to retaliate, listing off energy infrastructure targets at its neighbours including Qatar and Saudi Arabia. NBP near curve contracts had been in retreat in the morning with most of the gains from Monday and Tuesday being reversed before reports of the attack on the South Pars gas field. The front month reached a low of 126.22p per therm but quickly added over 15.00p through the afternoon, peaking at 143.82p before settling at 139.45p posting a gain of 8.25p day-on-day. The Summer contract added 7.52p yesterday while the winter contract settled 5.73p higher at 130.00p. Prompt prices rose on the back of the near curve increases and forecasts for temperatures to fall next week.
Power Market
Near GB baseload futures tracked the bullish movement on the NBP yesterday as contracts settled around 5.1% higher. The April contract settled £5.00/MWh higher at £102.55/MWh while the Summer-26 contract closed at £101.00/MWh, up £4.88/MWh. Contracts past the winter were marked lower at the close. Forecasts for lower wind generation added to the upside for the Day ahead product yesterday as the contract settled £4.25/MWh higher at £113.75.
Carbon EUAs continued to ease yesterday as EU leaders are to meet on Thursday and Friday to discuss reforming the market although the time may be spent looking at interventions to supress energy prices. Some politicians have suggested a range of €30- €40/ tonne for European Allowances, but this would need climate targets to be reset.
Oil Market
There was a major escalation in the Iran war after Israel launched a missile attack on Iran’s South Pars gas field yesterday. Iran promised to retaliate for the attack, issuing a list of potential energy infrastructure targets in Saudi Arabia, Qatar and the UAE. After the markets closed attacks were reported at Qatar’s Ras Laffen LNG facility which caused extensive damage. Refineries in Saudi Arabia were also targeted by Iran, but the missiles were intercepted. Meanwhile, Donald Trump is having little success drawing in aid from his allies in Europe to offer protection to shipping and allow movement through the Strait of Hormuz. He also announced the temporary lifting of several restrictions to allow for movement of fuel between U.S. ports. At the close, Brent was 3.8% or $3.96 a barrel higher at $107.38, its highest close since July 2022.
Markets this morning
After Iran’s retaliatory strikes on Qatar and Saudi Arabia overnight, gas and oil prices have increased sharply this morning. Besides the attacks on Qatar and Saudi Arabia, refineries in Kuwait were also targeted by Iran while UAE has been forced to shut down gas facilities. President Trump has tried to distance himself from the attack on Iran’s South Pars gas field yesterday and threatened a massive response if Iran attacks Qatar’s LNG facilities again. In the gas markets, April, is down 20.00p from the intra-day high of 180.00p but still up 19.63p for the day having last traded at 159.08p. Brent has added $7.18 a barrel this morning with the last trade going through at $114.56 a barrel.
