Energy market movements this week have again been dominated by events in the Middle East, but this time it has been a dramatic sell-off, rather than a rally, after Trump seemingly brought the conflict to a close. While questions have surfaced regarding the effectiveness of the strikes on Iranian nuclear activity, markets have been content to accept a significantly reduced risk premium in energy prices once Israel and Iran agreed to a truce, which has so far held. Israel has ordered a restart of production at the Leviathan gas field, which will ease the tight supply situation in the eastern Mediterranean. As a result of the this, the winter 25 UK gas contract fell from a high of 112.5 p/therm on Monday morning to low of 95.2 p/therm yesterday. Movements in power prices have not been as dramatic, but have fallen significantly from recent highs. It is fortunate that this incident did not happen in the winter and go on for longer, otherwise there could have been a far greater dislocation in European energy markets. Fortunately, coming as it did at a time of low gas demand and abundant renewable generation across Europe, the impact was contained and injections of gas into storage have continued. Still, the incident does highlight the fact that substituting Russian pipeline gas imports with LNG, has not immunised European energy markets from geopolitics.
Conditions in the North Sea are likely to continue to be breezy in the coming days while sunny weather further south supports solar generation. As July approaches, higher pressures may prevail leading to lower wind speeds, but plenty of sun, giving way to potentially more unsettled conditions from around the middle of July.
| Commoditiy | Front contract (£p/therm) | Winter 25/26 (£p/therm) | Summer 26 (£p/therm) | Winter 26/27 (£p/therm) |
|---|---|---|---|---|
| Price | 82.68 | 96.19 | 84.25 | 90.31 |
| Weekly Change | -8.60 | -7.73 | -4.59 | -4.08 |
| Commoditiy | Front contract (£/MWh) | Winter 25/26 (£/MWh) | Summer 26 (£/MWh) | Winter 26/27 (£/MWh) |
|---|---|---|---|---|
| Price | 75.40 | 86.27 | 72.76 | 81.47 |
| Weekly Change | -6.30 | -6.88 | -4.92 | -3.71 |
| Commoditiy | US Gas ($/mmbtu) | Brent ($/b) | EUA (€/MT) | UKA (£/MT) |
|---|---|---|---|---|
| Price | 3.38 | 67.96 | 70.31 | 49.63 |
| Weekly Change | -0.47 | -8.74 | -3.45 | -4.01 |
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