Markets react to overnight attacks on US military bases by Iran

The NBP edged lower on Tuesday, extending the previous session’s strong downward correction.

Intra-session volatility was elevated, however, with an attempt by Winter 26 to break back below psychological support at 140p/therm.

The front-season contract managed to swing as low as 136p/therm, but ultimately lost momentum and the contract retreated to a closing level of around 140.2p/therm (4.8p/kWh).

A brief pause in hostilities between the US and Iran, though initially reassuring for markets, appears to have ended. Iran reportedly launched a ‘surprise’ attack on US military bases in the Middle East on Tuesday evening, and there have been reports overnight and this morning that the US and Saudi Arabia are actively striking ‘Iran-backed groups’ in Iraq.

Strengthening wind generation helped to pressure near-dated baseload power contracts on Tuesday, alongside a further downward swing across natural gas and oil markets, though the latter did unwind slightly as the bulls tried to re-establish control later in the session.

According to Elexon data, wind power rose from an average of 7.7GW on Monday to 9.1GW on Tuesday, serving as the largest component of the power generation mix at 29.5%.

The grid operator in Great Britain, NESO, has issued SO-SO trade warnings every day for the past few weeks, reflecting generally tight electricity supply across Europe that has been exacerbated by recent and incoming heatwaves.

SO-SO (System Operator) trades are exceptionally expensive and are typically only used when operators cannot balance the grid with domestic resources.

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