Gas Market
UK gas prices were largely unchanged through much of Wednesday morning as the market assessed the implications of U.S. strikes on Iran following the downing of a U.S. helicopter near the Strait of Hormuz. The front-month Jul-26 contract initially drifted into negative territory as traders interpreted the overnight attacks as a limited response intended to deter further escalation rather than signal a broader conflict. However, sentiment shifted around midday after President Trump warned that Iran would “pay the price”, injecting fresh risk premium into the market. Jul-26 settled at 120.32p/th, recovering all of Tuesday’s losses as participants continued to monitor developments in the Middle East. Further along the curve, Winter-26 and Summer-27 also reversed the previous session’s declines. Beyond Q4-27 and into 2028, prices were little changed, suggesting the market still expects any disruption from the conflict to be relatively short-lived.
Power Market
GB Baseload contracts rose, tracking gains in the NBP gas market, while strength in UK carbon prices provided additional support to further-dated contracts. The Winter-26 Baseload contract gained £2.75/MWh, outperforming the near curve on the back of firmer gas and carbon. Near curve gains were limited by expectations that parts of the UK nuclear fleet will return from planned maintenance through July and August.
EU carbon prices started the session in decline following reports of a reduction in investment fund positioning and further leaks regarding potential EUA market reforms. However, gains across European power and gas markets, driven by renewed Middle East tensions, later supported a recovery, with the spot price settling firmly above €76/tonne.
Oil Market
The front-month Brent crude oil contract rose to $93.10/bbl on Wednesday as renewed tensions between the United States and Iran saw an increase in the geopolitical risk premium associated with crude prices. Prices surged by over $3/bbl initially after President Donald Trump warned of a forceful response if peace negotiations fail, raising concerns over further disruption to Middle East oil flows. Support also came from a larger-than-expected draw in U.S. crude inventories, highlighting tighter near-term supply conditions. Gains were tempered later in the session after Trump said U.S. covert military operations had helped maintain oil shipments through the Strait of Hormuz, easing fears of a more severe supply shock. While ongoing stock draws and conflict risks remain supportive, recent data showing weaker Chinese import of crude and the partial continuation of maritime traffic through the Strait are helping to limit further upside.
Markets this morning
UK gas prices are oscillating around Wednesday’s settlement as markets await further clarity on developments in the Middle East. Conflicting reports from Iran are adding to the uncertainty, with officials claiming recent strikes have “rendered the ceasefire meaningless”, while Qatari mediators continue to suggest that ceasefire negotiations between the U.S. and Iran remain on track. Reflecting the indecision, the Jul-26 contract is broadly unchanged at 120.14p/th. In contrast, front-month crude oil is softer, trading near $92.14/bbl, almost $1 below Wednesday’s settlement, as reports suggest oil tankers continue to pass through the Strait of Hormuz, although at a considerably lower rate than pre-conflict flows.
