Headlines:
- Prices have increased due to the lack of progress opening the Strait of Hormuz.
- Global competition for LNG is driving up prices.
- Low EU Gas Storage levels are creating nervousness for Winter 2026/2027.
Energy Overview
On Monday the 10th of August, Gas Year Ahead Wholesale costs moved 8% higher, also impacting on Electricity prices. There are small reductions this morning. Oil is higher at $90.
LNG exports from the Middle East via the Strait of Hormuz have been severely impacted, due to threats of attack. Despite ceasefires and the hope that a lasting peace deal will be agreed, it is becoming clear that in the short term, a significant resumption of shipping is unlikely.
LNG buyers are competing for available supplies, with the EU needing to purchase additional Gas for Storage, which is just 59% full, compared to 72% last year. The target is 80% by the 1st of November, which seems unlikely and creates nervousness as we approach the winter, especially with imports of Russian LNG to the EU being completely banned from January 2027.
High temperatures across Europe are impacting on some Electricity generation, that require water for cooling. This places a further demand on Gas generation.
The last week saw Gas provide 20% of generation, Wind 25% and 16% via the Interconnectors.
We would encourage customers with contracts that end in the next few months to discuss your renewals with us, and we will look to provide further advice and support as required.
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