Headlines:
- Prices continue to increase due to the effective closure of the Strait of Hormuz
- Low EU Gas Storage levels are a concern as we approach the winter
- Reduction for many 5% VAT payers from October 2026 on their Electricity bills
Energy Overview
As of the 20th of July, Gas and Electricity Year Ahead Wholesale costs were higher than last week, with further gains being seen today. There is still a considerable discount for contracts starting in 2027 and 2028. Oil is also higher, currently at $89 from $87.
The situation in the Middle East remains volatile with both the US and Iran attacking military assets and infrastructure. Shipments of Oil and LNG through the Strait of Hormuz have been severely reduced, restricting access to 20% of global supplies. Competition between Europe and Asia for LNG is inflating Gas costs. EU’s Gas Storage is just 54% full compared to 65% last year. Low levels create a price pressure due to concerns for supplies through the winter.
VAT on Electricity bills will be reduced from 5% to 0% for domestic and some other 5% qualifiers, from October 2026. It is also expected that the go-ahead will be given to Oil and Gas projects in the North Sea, which were previously in doubt due to Net Zero ambitions.
The last week saw Gas provide 25% of generation, Wind 16% and 20% via the Interconnectors. High temperatures across much of Europe are increasing energy demand for air cooling.
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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