Market firms up amid developments in the Middle East

The market firmed on Monday as developments in the US-Iran conflict supported risk premiums across global energy markets.

Over the weekend, US President Trump announced via the Truth Social platform that there will be a blockade of Iranian ports in the Gulf of Persia starting at 3pm UK time on Monday 13th.

The two-week ceasefire, which began last week, appears to remain in effect for now despite fragmented reports of strikes across Gulf states.

Market participants remain focused on the Strait of Hormuz, the narrow waterway that serves as the entrance and exit for the majority of exports from the Gulf.

Since the start of the conflict, energy flows via Hormuz have seen a dramatic decline.

Declining renewable generation, alongside an upward correction on adjacent energy markets. According to data from Elexon, wind power had declined for 2 consecutive days to average just 4.9GW on Monday.

This was enough to meet approximately 15% GB demand, but gas generation was considerably higher in proportion (11.4GW/ 34.5%) bringing more volatility from fossil fuel markets into the mix for prompt and near-curve contracts.

Interconnector imports from neighbouring countries held steady when compared to Friday’s session, meeting around 14% of supply.

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Price commentary courtesy of Crown Gas and Power