Gas Market
After opening relatively flat against their previous close on Friday morning, U.K. wholesale gas prices fell in the afternoon following news that the Strait of Hormuz had been declared completely open. The front month contract fell to an intra-day low of 95.52p per therm after the Iranian foreign minister said that the strait would stay open to commercial ships for the remainder of the ceasefire. Although Donald Trump confirmed that the U.S. naval blockade of Iranian ports would remain in place until a permanent peace deal is agreed, markets appeared comfortable to retrace a portion of the supply risk premium built up since the start of the conflict. The May 26 contract settled at 97.11p per therm, down 9.19p on its previous close, and down 11.5% week-on-week. The prompt market also displayed weakness on continued hope for progress in peace talks, with the Day ahead contract falling by 7.60p day-on-day to close out the week at 97.90p per therm.
Power Market
With growing signs of an easing of geopolitical tensions in the Middle East, UK Baseload power futures declined on Friday, in tandem with gas and oil markets. The Winter 26 contract fell by £4.60/MWh to close at £88.00/MWh, while the front month contract saw a drop of £5.25/MWh to settle at £82.50/MWh, a 5.98% fall across the trading day. In contrast, lower wind and solar output forecast for early this week supported the prompt market, with the Day ahead contract gaining £14.42/MWh by the close.
Carbon allowances strengthened on Friday, showing the largest weekly gains since November 2024, amid optimism that commercial traffic would return to the Strait of Hormuz. The Dec 26 EUA contract closed at €76.80 a tonne, up €1.80 day-on-day, while Dec 26 UKA’s closed up by £0.80 to settle at £51.20 a tonne.
Oil Market
A subdued open was replaced by significant losses across crude oil markets on Friday following news that the Strait of Hormuz had been declared fully open. While the confirmation from Iran’s foreign minister that passage for all commercial vessels through the strait was open for the remaining ceasefire period, reports of further talks between the U.S. and Iran over the weekend as well as a 10-day ceasefire between Lebanon and Israel raised hopes that the war in the Middle East could be nearing an end. The news reduced geopolitical and supply-risk premiums, with the front month Brent contract shedding 9.1% by the end of the session to settle at its lowest close since 10th March. The West Texas Intermediate (WTI) contract for May 26 delivery was also in decline, falling by $10.84 to close out the week at $83.85 a barrel.
Markets this morning
U.K. wholesale gas prices have bounced back from Friday’s losses this morning over concerns that the ceasefire between the U.S. and Iran could collapse. Within hours of the Strait of Hormuz being declared fully open on Friday, reports emerged that vessels were being fired upon. The U.S. also confirmed on Sunday that it had seized an Iranian cargo ship that tried to break through its blockade, with Iran stating it would retaliate. With the Strait of Hormuz largely shut once again and hostilities growing, the front month contract last went through at 102.11p per therm, a gain of 5.00p day-on-day. Crude oil markets have responded similarly to the heightened geopolitical tensions, with the front month Brent contract gaining $5.48 a barrel since Friday’s close so far.
