Headlines:
- The conflict in the Middle East is impacting on global energy costs
- Gas and Electricity Wholesale costs are lower than last week
- EU Gas Storage is just 28% full compared to 35% last year and 60% in 2024
Energy Overview
Gas and Electricity Year Ahead Wholesale costs are lower than last week. Oil is lower at $109 from $118.
The conflict in the Middle East between the US, Israel and Iran continues, with attacks by all parties. So far Iran has rejected terms for a ceasefire as they want a permanent end to the war. President Trump has set a new deadline of Wednesday morning (GMT) for Iran to open the Strait of Hormuz, or the US will destroy Iran’s infrastructure. Those attacks would likely add upward pressure to energy costs, which the US has tried to avoid and so as previously, the deadline may be extended. The damage already done, including to Qatar’s LNG facility, could take years to repair and have an impact on supplies and prices even when the conflict ends.
Iran appears to have made agreements with some Asian countries to allow their vessels to pass through the Strait as they are typically the destination for Oil and LNG from the region, whereas the UK and EU are more reliant on LNG from the US. EU Gas Storage remains at just 28% full compared to 35% last year, but has increased slightly. There could be some difficulty filling Storage before winter 2026/2027 due to reduced global supplies and higher costs, but there is a greater importance with the EU ending the use of Russian LNG from January 2027.
Electricity prices are following Gas due to its contribution to generation, which was 20% of supplies last week. Gas is an expensive source of energy but is still required to provide some baseload Electricity and be flexible to accommodate unreliable Renewables. Wind contributed 29% last week, down from 38%.
We would encourage any customer with a contract that ends in the next few months, to discuss your renewals with us and we will look to provide additional market intelligence, guidance and support as required.
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