NBP price level reflecting nervousness around US-Iran ceasefire extension

A slight recovery in NBP prices was observed on Thursday, despite hopes that the US-Iran ceasefire can be extended via Pakistani mediation.

The longer-term effects that the conflict will have on global supply chains continues to become more uncertain with every passing day that shipping is stalled via the Strait of Hormuz.

While the market has shed a substantial portion of the risk premium added to pricing after the onset of the war, where the Winter 26 contract soared to over 150p/therm (5.1p/kWh), yesterdays close for that contract was 107p/therm, still at a significant premium to the last settlement before the war took hold of market sentiment, 80.7p/therm posted on 27th February.

Power prices held steady yesterday as strong renewable output offset wider market risks.

Wind has emerged as the largest source of generation in the second half of this week, subduing demand for gas-fired generation and easing pressure on the power stack, with renewables meeting an increased share of system demand.

However, growing uncertainty surrounding the US–Iran conflict is reinforcing the risk component of pricing, given the potential impact on a key global energy corridor.

Irish airline Ryanair warned earlier this week that its jet fuel supplies are only secured until mid-May, reflecting reliance on light crude oil from the Gulf of Persia, underscoring the global and interconnected nature of energy markets and the wide-reaching disruption the conflict is causing.

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Price commentary courtesy of Crown Gas and Power