Headlines:
- Prices increased with renewed hostilities in the Middle East
- The recent pause in the conflict has allowed prices to ease slightly
- Prices are likely to remain unstable due to failed peace talks
Energy Overview
On Monday the 27th of July, Gas and Electricity Year Ahead Wholesale costs were similar to last week. There were large gains due to the renewed hostilities between the US and Iran, but a new US pause in the bombing over the weekend has seen prices fall back. There is still a considerable discount for contracts starting in 2027 and 2028. Oil is lower, currently at $87 from $89.
Due to the effective closure of the Strait of Hormuz, attacks in the Red Sea, damage sustained to infrastructure and the ongoing threat of further attacks, little LNG is being exported from the region. This has meant that shipments which were due to be made are being cancelled, placing further demand of other global sources as nations compete for Gas, pushing up prices.
The EU’s Gas Storage remains very low at just 55% full compared to 66% last year, which is another price pressure. Ukraine will look to export some of their excess Gas supplies and the UK is apparently considering changing policy and allowing Oil and Gas expansion in the North Sea.
The last week saw Gas provide 19% of generation, Wind 22% and 23% 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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