Gas Market
A series of hostiles strikes launched by the U.S. towards Iran on Tuesday night pushed UK wholesale gas prices higher on Wednesday. The reignited conflict has raised concerns that the Strait of Hormuz will close again and further hamper global LNG supply. Wholesale prices found additional support from European storage levels currently sitting around 50%, below the seasonal average and about 10% lower than this time last year. The front-month NBP contract gained 5.95p off the back of yesterday’s events, settling at 116.70p per therm. Risk was also being priced further out the curve as the upward trend continued for the Winter-26 contract closing at 120.24p per therm following a 5.48p rise on the day. On the prompt, the Day ahead NBP price settled at 116.88p per therm, up 6.13p across the trading day. Lower wind generation on Wednesday increased gas demand, strengthening the short-term price alongside the heightened geopolitical risk.
Power Market
UK power futures tracked movements in the wholesale gas market, with contracts bolstered by heightened tensions in the Middle East. The front-month contract added £2.60/MWh to settle at £101.35/MWh, while the front-season Winter-26 contract gained £2.65/MWh to close at £105.35/MWh. On the prompt, Day ahead power jumped £10.41/MWh to £121.50/MWh as the geopolitical risk premium lent support.
European carbon prices eased on Wednesday after the European Commission announced some details of its upcoming reform package, which pointed to an increase in the supply of carbon allowances. The EUA Dec-26 contract declined €1.34 to settle at €79.04 per tonne.
Oil Market
Crude oil prices rose to their highest levels since June 19th on Wednesday following a statement from U.S. President Trump that the ceasefire between the U.S. and Iran is “over”. The American leader added that his delegated negotiators can continue with peace talks “if they want”, fuelling uncertainty surrounding the conflict. This statement was preceded by a series of hostile attacks launched by the U.S. towards Iran on Tuesday night. Crude oil markets were pricing in the risk of renewed attacks on shipping vessels and further restrictions on exports through the Strait of Hormuz. It is reported that at least four oil and gas tankers have turned back from attempting to transit the Strait as yesterday’s events heightened safety concerns. The increased premium brought the Brent front-month contract to a settlement price of $78.02 per barrel, gaining $3.86 on the day. The West Texas Intermediate (WTI) front-month contract followed suit, edging up $3.08 to settle at $73.52 per barrel.
Markets this morning
UK wholesale gas and crude oil prices opened marginally lower this morning as markets assess the latest escalation between the U.S. and Iran. A further round of U.S. strikes hit Iran on Wednesday night, coming just hours after U.S. President Trump stated the ceasefire had ended in response to Iranian strikes on energy cargo vessels on Tuesday. The front-month Brent crude oil price is currently trading at $77.65 per barrel down $0.37 since the market opened and the front-month NBP contract is down 0.73p with a current price of 115.97p per therm. Sources from the insurance industry have said that shipping companies are being advised to suspend transits through the Strait of Hormuz as safety risks are too high.
