Reports of Strait of Hormuz reopening sparks strong price swing

Reports that the Strait of Hormuz could reopen as part of a tentative US-Iran ceasefire sparked strong downward swing at the NBP on Wednesday as participants eyed bearish signals regarding supply from the Gulf of Persia, which (prior to the war) accounted for around 20% of global LNG cargoes.

The front-end of the curve saw the biggest losses, with the Winter 26 front-season contract posting substantial downside of 14.7% when compared to its previous settlement, brining it back to levels comparable to early March.

Uncertainty about the soundness of the ceasefire served as a price floor for energy markets, there are reportedly disagreements about the agreement, with key points yet to be finalised and some strikes reported yesterday.

UK baseload power prices also posted significant losses, tracking weakness across the wider energy complex following news of a US–Iran ceasefire.

The easing of geopolitical risk weighed heavily on commodity markets, with crude oil falling 13.3% day-on-day and natural gas also under pressure, filtering through to softer power pricing.

On the fundamental side, wind generation between Monday and Wednesday dropped 19.7% versus the same period last week, tightening system supply.

However, this was partially offset by weaker demand, which fell from around 35.3GW to 31.1GW over the same period, limiting upside potential for near-term power prices this morning.

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Price commentary courtesy of Crown Gas and Power