Gas Market
UK wholesale gas prices retraced much of Tuesday’s losses, with contracts across the near curve rising by more than 2.5%. The lack of progress in ceasefire and peace negotiations in the Middle East, compounded by continued attacks across the region, reinforced the geopolitical risk premium already embedded in prices. The front-month Jul-26 contract settled at 117.90p/th, although it briefly tested the 120.00p/th level in late after-hours trading. Reports of an Iranian attack on Kuwait International Airport heightened concerns over a broader regional escalation. Iran reiterated that it would not support a ceasefire agreement while Israeli military operations in Lebanon continue, with further strikes reported overnight on Tuesday and into Wednesday. These developments added to market uncertainty and weakened expectations for a near-term de-escalation of the conflict, helping to underpin gas prices.
Power Market
The Jul-26 GB baseload contract retraced Tuesday’s losses, settling Wednesday broadly in line with Monday at £103.50/MWh. Gains were supported by firmer NBP gas prices amid escalating geopolitical risks in the Middle East. On the prompt, the Day-ahead contract fell to £70.00/MWh, down 28% day-on-day and 39% lower than Monday’s level, as strong wind forecasts across Great Britain weighed on prices. Looking ahead through June, prices continue to find support from reduced nuclear availability due to planned maintenance across Britain’s nuclear fleet.
On European carbon markets, early support from increased speculative positioning gave way to downward pressure from weaker equity markets and growing economic concerns. The benchmark Dec-26 contract settled at €78.79/tonne, down 0.67% on the day.
Oil Market
The front-month Brent crude oil contract rose to $97.81/bbl on Wednesday, extending the previous session’s gains as escalating tensions between Iran, the United States and Middle Eastern Nations heightened concerns over continued supply disruptions. Market sentiment was supported by signs that diplomatic efforts between Tehran and Washington remain stalled, reducing expectations for a near-term easing of geopolitical risks. The continued disruption to flows through the Strait of Hormuz added to supply concerns, while the International Energy Agency warned that global inventories could tighten further ahead of peak summer demand. Additional support came from a larger-than-expected draw in U.S. crude stocks, reflecting strong export and refining activity. Together, these factors reinforced a growing risk premium in oil prices despite broader concerns about the global economic outlook.
This morning
News reports of a ceasefire between Israel and Hezbollah, aimed at limiting hostilities in Lebanon, are weighing on oil markets. If sustained, the agreement could represent an initial step towards broader negotiations between the US and Iran. As has been the case in recent weeks, President Trump has suggested a deal could be reached over the weekend, although similar comments have repeatedly failed to materialise over the past six weeks. As a result, oil is trading around 1.5% lower at $96.32/bbl. In contrast, NBP gas prices are holding more cautiously, with contracts broadly unchanged from Wednesday’s settlement levels.
