Gas Market
UK gas prices fell steeply on Friday after U.S. President Trump posted he believed that Iran’s Supreme Leader had accepted a deal and that a signing was expected soon. Iranian Foreign Minister Abbas Araqchi tempered expectations, saying a memorandum of understanding had not yet been signed and could still change. The proposed agreement reportedly calls for reopening the Strait of Hormuz and lifting the U.S. naval blockade on Iranian ports. Losses were sharpest on the near curve, where any deal would most directly reduce the geopolitical risk premium. The front-month NBP contract fell 7.85p to 111.91p/therm, with Winter-26 down 6.80p at 117.49p/therm. Prompt prices were also dragged lower by improved supply fundamentals. Norwegian flows to Easington more than doubled day-on-day to 33mcm after an unplanned outage at the Troll field was resolved, leaving the British gas system 8mcm oversupplied. The Day-ahead settled 8.45p lower at 113p/therm on the day.
Power Market
GB Baseload front-month fell £5.25 to £98.30/MWh on Friday, tracking NBP gas lower after Pakistan’s prime minister confirmed a final U.S.-Iran peace deal text was close to being agreed. Winter-26 dropped £4.65 to £102/MWh, while contracts further along the curve were more muted, with Summer-27 down just £0.75. Downward revisions to wind output this week pushed the working day-ahead Monday contract up 37% to £109/MWh.
The Dec-26 EUA contract was largely unmoved on Friday, edging up just 3c to close at €77.17/tonne, leaving it little changed on the week. With carbon not recently been correlated to the gas market, the downward shift in gas prices is unlikely to weigh on EUAs; any broader market reaction to the Iran deal is more likely to come through a bullish equity movement.
Oil Market
Brent crude prices fell to their lowest levels since early March on Friday, as traders grew more confident that a U.S.-Iran peace agreement was imminent. Front-month Brent settled down $3.05, or 3.37%, at $87.33/bbl, leaving it $5.76/bbl lower on the week. Both sides signalled the deal was close, with a senior U.S. administration official saying they had agreed on a text and that Washington expects to sign an initial agreement within days. Iranian Foreign Minister Abbas Araqchi struck a more cautious tone, saying a memorandum of understanding had not yet been signed and could still change. The proposed agreement calls for reopening the Strait of Hormuz and lifting the U.S. naval blockade on Iranian ports. Negotiations over Iran’s nuclear programme, which was President Trump’s stated rationale for the war, would follow separately. A reopening of the Strait would ease supply concerns at a time when global and regional oil stocks remain low. Israel, which fought alongside the United States, has been excluded from the negotiations. Prime Minister Benjamin Netanyahu said his country would not be party to any agreement.
Markets This Morning
Gas and oil prices are lower this morning as markets tentatively digest weekend news that the U.S. and Iran have agreed to end their war and reopen the Strait of Hormuz. The deal, which caps weeks of fraught negotiations since an initial ceasefire was agreed in early April, is set to be signed in Switzerland on Friday. Uncertainty over how quickly Gulf production can recover is tempering the market reaction. NBP Winter-26 gas has shed 5.79p at 111.70p/therm, while front-month Brent is down $4.47/bbl at $82.80/bbl. Despite falls in both markets, the geopolitical risk premium is unwinding more slowly in gas than in oil. Jul-26 NBP is still trading at a 50.3% premium to pre-war 2026 averages, compared with a 24% premium in Brent relative to pre-war levels.
