This time, the US did not wait until markets closed for the weekend before retaliating to the strike on a Qatari LNG vessel yesterday and Iran countered with strikes against Bharain and Kuwait. In a press conference at the NATO summit in Ankara, Trump said that the ceasefire is "over" that his negotiators "want to negotiate" with Iran, but "As far as I'm concerned, it's just a waste of time dealing with them. They're liars." He also said that the US might hit Iran again "hard" tonight and talked about the possibility of reimposing the naval blockade against Iran. This had a predictably positive effect on energy prices. The oil market had become particularly confident that the worst of this crisis was over and whereas Brent traded close to 70 \$/b at the end of last week, it rallied to just over 80 \$/b today. Winter 26 UK gas traded over 120 p/therm, not far off the highs of May and June, while winter baseload power pushed over 100 £/MWh at the close today. It only takes one missile to damage confidence in shipping. Though the US has shown it willing to come down heavily on Iran in response to attacks on shipping, unfortunately, the military action does not seem able to remove the threat of the one-off Iranian missile strikes.
The problem is perhaps most acute for gas. QatarEnergy had already pushed back its force majeure to September following the explosion at its LNG plant in the Persian Gulf the other week, but this latest development may cut off the limited recovery in exports that can be seen in the global LNG export chart at the end of this report. European gas in storage has just crossed the half full mark – perhaps not bad in the circumstances – but well behind usual levels at this time of year. There has not much impact on the curve beyond winter 26 though – for gas or power.
The heatwave across North-West Europe has not prevented lower pressure systems skirting the North Sea which have helped to maintain levels of wind generation. This, combined with strong solar output has helped the market cope with air conditioning demand. Temperatures look set to moderate over the weekend, but high pressure is forecast to move further north as a low-pressure system builds across southern Europe, which could lead to lower wind generation. Later this month, more low-pressure systems are due to arrive leading to cooler more unsettled weather.
| Commoditiy | Front contract (£p/therm) | Winter 26/27 (£p/therm) | Summer 27 (£p/therm) | Winter 27/28 (£p/therm) |
|---|---|---|---|---|
| Price | 115.27 | 120.39 | 84.40 | 84.34 |
| Weekly Change | 13.58 | 13.63 | 5.68 | 3.59 |
| Commoditiy | Front contract (£/MWh) | Winter 26/27 (£/MWh) | Summer 27 (£/MWh) | Winter 27/28 (£/MWh) |
|---|---|---|---|---|
| Price | 101.48 | 104.90 | 77.38 | 79.05 |
| Weekly Change | 8.63 | 7.94 | 1.99 | 1.80 |
| Commoditiy | US Gas ($/mmbtu) | Brent ($/b) | EUA (€/MT) | UKA (£/MT) |
|---|---|---|---|---|
| Price | 3.21 | 78.23 | 78.54 | 56.46 |
| Weekly Change | -0.07 | 6.66 | -0.50 | 0.51 |
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