Prices up at the NBP as war in Middle East escalates

Gas prices rebounded at the NBP on Wednesday, with renewed Middle East tensions serving as the primary source of support.

Overnight reports that Iran had launched targeted strikes on US bases and infrastructure in Jordan had already upended the near-curve first thing in the morning.

Several ballistic missiles were intercepted by Jordanian and US air defence systems and no infrastructure was damaged. Tensions escalated further overnight as the US launched a two-hour wave of heavy airstrikes against Iranian military installations, launch sites, and radar infrastructure.

The market has softened slightly this morning, however, with the Winter 26 front-season contract currently offered roughly 2p/therm (0.068p/kWh) below yesterday’s close.

UK baseload power prices mirrored the gas market’s bullish run on Wednesday, finding strong support from the escalation in Middle East conflict.

Generation fundamentals added further upside, as falling wind generation forced a heavier reliance on gas-fired plants. Wind output dropped from 9.1GW (29.5% of the fuel mix) on Tuesday to 5.4GW (16.9%) on Wednesday.

Strength across the wider energy complex provided additional momentum, led by Brent Crude, which surged 7.9% day-on-day.

UK forecasts of a fourth summer heatwave are providing further underlying support across near-dated gas and power contracts.

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Price commentary courtesy of Crown Gas and Power