Gas Market
Events in the Middle East pushed gas prices higher in Monday’s session as markets reacted to renewed tit-for-tat attacks over the weekend. The front-month July contract expired at 102.61p/th, up 4.9% on Friday’s close, supported by increased buying activity and an elevated geopolitical risk premium. Reports indicated US forces struck Iranian military targets following last Thursday’s reported attack on a commercial tanker in the Strait of Hormuz, while Iran responded with strikes on US-linked sites in Bahrain and Kuwait, underscoring the fragility of the current ceasefire. Risk premium was not confined to the near curve, with the Winter-26 contract settling at 106.67p/th, up 3.73p. Further out the curve, however, gains were more limited, reflecting expectations that a diplomatic resolution could still emerge in the near term.
Power Market
The front month GB baseload power contract rose sharply on Monday, supported by firmer gas prices and forecasts of a heatwave across northwestern Europe in early July. The prompt contract was the strongest performer on the curve, outperforming the August contract as expectations of higher cooling demand lifted short-term power pricing. In addition, European markets are expected to draw on UK exports to help meet cooling needs, with the Jul-26 contract settling at £98.40/MWh.
Carbon prices declined on Monday as investors took profits following recent gains, with selling pressure intensifying after reports of potential ETS reform prompted a reassessment of longer-term supply expectations. Prices initially remained supported above €80/t but later reversed sharply, with the Dec-26 contract sliding to an intraday low of around €78.30/t as momentum turned decisively lower.
Oil Market
The front month Brent crude oil contract rose to $73.15/bbl on Monday as renewed U.S. and Iranian attacks highlighted the fragility of their interim peace agreement, raising concerns over the security of oil flows through the Strait of Hormuz. While technical talks aimed at implementing the ceasefire are expected to continue in the coming days, the market remained focused on the recovery in regional exports. Outbound Persian Gulf crude shipments have rebounded to around 75% of pre-conflict levels, although ongoing security risks, elevated insurance costs and navigational restrictions continue to constrain tanker movements through the strait. These lingering disruptions have supported prices despite Middle East producers pressing ahead with crude and LNG loadings, reinforcing expectations that export flows will continue to recover gradually if the ceasefire holds.
Markets this morning
Uncertainty surrounding developments in the Middle East, and whether direct talks between the U.S. and Iran will take place in Doha this week following conflicting reports, continues to support UK gas prices. The new front-month Aug-26 contract last traded 2.23p higher at 104.79p/th, while the winter contract also shows signs of strength as it maintains its upward trajectory. Crude oil is broadly unchanged as markets await clarity from Doha and any potential progress in negotiations, although a recent Morgan Stanley report continues to forecast an oversupplied oil market into 2027 despite this year’s geopolitical disruptions in the Middle East. In carbon markets, the Dec-26 EUA contract is little changed following yesterday’s decline, trading 0.37% above Monday’s settlement.
