Gas and oil markets are on tenterhooks over Trump’s response towards Iran. Brent came close to 66.50 \$/d today on news that some staff at a US base in Qatar are being reduced as a "precautionary measure" – perhaps in case US action leads to retaliation from Iran. Short-dated gas and power has also spiked sharply. The front UK gas future has rallied from 75 p/therm on Monday to a high over 85 p/therm today, while the front UK baseload power contract settled at 94.58 £/MWh today. The market’s fear, just as during the height of the Israel/Iran conflict last year, is that a confrontation with Iran could lead to a disruption to the shipping of oil and gas out of the Arbian Gulf via the Stright of Hormuz.
The weather has become warmer of late, but the recent cold snap did take its toll on gas inventories which are now down to 53 % full across Europe, but this point is being reached only two or three weeks earlier than it was last year. Global LNG exports remain at record levels helping to boost supplies in Europe and elsewhere and prices in Asia have remained at pre-Christmas meaning that they are now below European hubs.
The weather outlook continues to be a little milder, but there is due to be a high-pressure weather system from the east competing with wet and windy weather coming in from the Atlantic. It is not clear which will dominate, but there is certainly a risk of cold and still weather during this month. This is not impacting longer dated prices though, which remain largely stable.
Today, the Department of Energy Security and Next Zero published the results of the AR7 for offshore wind energy projects. Here are the results:
| Technology: | Administrative Strike Price £/MWh (2012 prices) | Administrative Strike Price £/MWh (2024 prices) | Clearing Strike Price £/MWh (2012 prices) | Clearing Strike Price £/MWh (2024 prices) |
|---|---|---|---|---|
| Offshore Wind | 81 | 113 | 65.45 | 91.2 |
| Offshore Wind - Scotland | 81 | 113 | 64.23 | 89.49 |
| Floating Offshore Wind | 194 | 271 | 155.37 | 216.49 |
The results for on-shore wind, solar and other technologies are not due until next month.
| Commoditiy | Front contract (£p/therm) | Summer 26 (£p/therm) | Winter 26/27 (£p/therm) | Summer 27 (£p/therm) |
|---|---|---|---|---|
| Price | 83.06 | 65.46 | 69.36 | 57.84 |
| Weekly Change | 8.57 | 0.10 | -1.08 | -1.52 |
| Commoditiy | Front contract (£/MWh) | Summer 26 (£/MWh) | Winter 26/27 (£/MWh) | Summer 27 (£/MWh) |
|---|---|---|---|---|
| Price | 94.58 | 71.48 | 77.32 | 66.31 |
| Weekly Change | 11.29 | 0.75 | 0.81 | 0.71 |
| Commoditiy | US Gas ($/mmbtu) | Brent ($/b) | EUA (€/MT) | UKA (£/MT) |
|---|---|---|---|---|
| Price | 3.10 | 66.09 | 90.15 | 70.62 |
| Weekly Change | -0.43 | 6.13 | 3.66 | 3.78 |
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