Headlines:
- Energy costs are being influenced by the conflict in the Middle East
- Reports of some progress in negotiations
- EU Gas Storage remains low and needs to be topped up for winter 2026/2027
Energy Overview
Gas and Electricity Year Ahead Wholesale costs are lower than last week. Oil is lower at $99 from $111.
Energy prices are being heavily influenced by the conflict in the Middle East due to the almost complete disruption of Oil and LNG supplies through the Strait of Hormuz, which contribute an estimated 20% of global supplies. The US continues to blockade Iran’s ports to add additional pressure to negotiate, but despite renewed claims of progress, there are considerable differences between the two parties. Over the weekend Iran dismissed reports that a deal was close and the US has since attacked some missile sites and boats which were apparently looking to lay mines. The planned industrial action at some of Australia’s LNG facilities was adding additional upward pressure to global Gas supplies and prices, but these have been called off. Australia is one of the largest exporters of LNG, with the US and Qatar, so this remains a concern until the issue has been resolved.
In response to rising costs, the UK has eased some restrictions on imports of diesel and jet fuel where the Oil comes from Russia, and on deliveries of Russian LNG to other countries. EU Gas Storage remains low at just 38% full compared to 46% in 2025 and 68% in 2024. EU bans on Russian LNG from April 2026 and January 2027 allow less opportunity to replace Storage through the warmer months for use in the winter.
The last week saw Gas provide 19% of generation, Wind 28% and 19% via the Interconnectors. Electricity Wholesale costs are still being influenced by Gas, which the government is taking measures to try to address.
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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