Prices rise as geopolitical tensions intensify across the Middle East

The NBP experienced a sharp upward correction on Monday as geopolitical tensions intensified across the Middle East.

The market opened firm following news that missiles had been intercepted over Kuwait. Reports quickly followed that Iran was suspending indirect negotiations with Washington, citing ongoing Israeli military operations against Hezbollah forces in Lebanon.

Iranian state media subsequently reported that, because of these stalled talks, Tehran vowed to ‘completely’ block access to the Strait of Hormuz.

This aggressive rhetoric served as the primary source of market support, considering 20% of global oil output and 20% of LNG trade transits via the narrow waterway, which has experienced unprecedented disruption since the regional conflict erupted on 28th February.

Rising tensions in the Middle East served as a prime source of support across the wider energy complex, with a drop off in solar generation particularly strengthening the relationship between gas and power.

According to data from Elexon, wind output fell by around 45% when compared to Friday; this, along with slower wind speeds, prompted higher gas-fired power demand.

CCGT (Combined Cycle Gas Turbine) plants served as the largest source of generation, accounting for 32% of the GB power mix on Monday.

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Price commentary courtesy of Crown Gas and Power