Heightened tensions in the Middle East drives renewed price pressure

Heightened Middle East tensions returned to the forefront of market sentiment this week, with the Winter 26 front-season contract continuing to rally on Wednesday and closing at a monthly high of just over 120p/therm (4.1p/kWh), according to ICE data.

Military actions occurred on two consecutive nights as the US and Iran exchanged strikes; the US resumed targeted strikes on air defence systems and missile and drone storage sites along Iran’s coastline, according to US Central Command.

Observers note that the previous ceasefire has effectively broken down, and President Trump stated at a NATO summit on Wednesday that it was over.

This development creates uncertainty for the future of maritime travel and safety via the Strait of Hormuz, inflating the risk element in nearcurve pricing substantially across this week.

Baseload power prices resumed their upward trajectory on Wednesday, guided higher by a combination of bullish gas prices and lower renewables.

According to data from Elexon, wind power fell to just 2.9GW (8.7% of mix) on Wednesday.

This reflected a 76% decrease when compared to Monday’s output, that prompted gasfired power demand to almost triple over the same period. Reactor number 7 is expected to come back online at EDF’s Heysham 2 nuclear plant after several weeks of maintenance.

It will soon be joined by reactors at Heysham 1 and Hartlepool, which are returning to service at the beginning of August. This should help to lift nuclear generation, which has been subdued for several months due to extensive planned works.

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Price commentary courtesy of Crown Gas and Power