Prices climb sharply amid escalating geopolitical tension

Gas prices at the NBP climbed sharply on Thursday as escalating geopolitical tensions and persistent supply risks continued to unsettle markets.

Upside was seen across the curve, with the Summer 26 contract posting some of the largest moves of the session, rising more than 9p/th (0.307p/kWh) from its previous settlement.

Supply concerns remain a key driver of the rally, following Iran’s decision to close shipping lanes in the Strait of Hormuz for military exercises.

At the same time, mounting friction between the US and Iran has added further support to an already nervous market.

Speaking aboard Air Force One yesterday, President Trump indicated that Iran has 10 to 15 days to negotiate a new nuclear agreement, while the US continues to bolster its military presence in the region.

On the power front, baseload prices unsurprisingly tracked the strong gains seen in the gas market, posting sharp day on day increases across the curve.

Geopolitical tensions and supply concerns also helped to drive the bullish momentum in the UK power market, however a steep drop in renewable generation perhaps provided further support to prices.

National Grid data shows wind-output fell by an exceptional 47%, while solar generation declined by more than 16% compared with the previous session.

This shortfall significantly increased reliance on CCGT, with gas fired offtake surging by around 74% over the same period.

If you want to see more information on the wholesale market trends subscribe to our weekly report here.

Price commentary courtesy of Crown Gas and Power