As expected, wholesale gas and electricity markets both saw extreme gains in the short term, as far out as the end of winter 2026, with more subdued increases in terms beyond that, starting with summer 2027.
This was a result of the latest dialogue in the Gulf, with both sides trading reparation claims.
The situation will be resolved, and when it is, this volatility will subside. For the moment, however, expect continued volatility in the wholesale gas market, which then feeds directly through to the electricity market.
| Gas: Gas prices rose significantly yesterday as an agreement between countries to re-open the Strait of Hormuz was becoming increasingly difficult. Iran said that their agreement with Oman would not be sufficient to re-open the Strait whilst the US wants to continue economic pressure on Iran, indicating that the countries are not close to an agreement. Prices have continued to rise in the open. Power: Power prices rose yesterday as they were heavily influenced by the gains in the gas market. In the prompt, prices were further supported as wind generation is forecast 20% below average. Softening carbon prices allowed for some bearishness in the further out curve. Prices have risen in the opening today. Oil: Oil prices rose yesterday. A potential deal between the US and Iran to reopen the Strait of Hormuz is once again on the table but the list of demands insisted by Iran is causing doubts that the US will agree. Prices have opened flat this morning as the market awaits the news on the deal after the US president demanded compensation for damages. Carbon (EUAs): The ICE Dec-26 traded to €82.27/t yesterday. The contract opened this morning at €82.20/t. Carbon (UKAs): The ICE Dec-26 fell to £59.02/t yesterday, opening this morning at £58.96/t. |
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