Prices jump up amid reports of ceasefire violation

Gas prices corrected higher on Friday, seemingly losing bearish momentum and finding support above the 100p/therm psychological level.

News that a projectile had struck a vessel in the Strait of Hormuz served as the primary driver for the increases.

The US blamed Iran for the strike on a cargo ship, calling the incident a ‘foolish violation’ of the ceasefire agreement and launching retaliatory strikes on several targets in Iran. Then on Saturday, Iran targeted US military installations in Kuwait and Bahrain.

Yesterday, both countries agreed to ‘stand down for now’ and prioritise further peace talks. The market reaction to the escalation is evident this morning, though it is relatively muted.

The Winter 26 front-season contract is currently being offered about 2.5p/therm (0.085p/kWh) above its previous settlement, at time of writing.

The baseload curve continued to track the NBP closely, with strong gas-fired power demand keeping the two markets closely interlinked.

Cooling temperatures across Europe should help bring demand back toward seasonal norms, and at the same time, lift export capacity from neighbouring countries such as France.

The latest run of our 14-day model indicates that both wind and solar are set to improve moving into the second half of this week, strengthening the short-term supply and demand outlook.

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Price commentary courtesy of Crown Gas and Power