Sharp gains at the NBP as conflict escalates between Yemen’s Houthi rebels and Saudi Arabia

NBP contracts saw sharp gains on Tuesday, with the escalating conflict between Yemen’s Houthi rebels and Saudi Arabia serving as a primary source of support.

The Summer 27 front-season contract added 4.4p/therm, reacting to Monday’s Houthi strikes on Saudi airports and Saudi-backed advances near Bab el-Mandeb.

Saudi crude rerouted from Hormuz now depends heavily on the strait, leaving a critical supply artery exposed to further attacks.

Strength further out reflected mounting refill anxiety; European storage stood at 72.83% on 6th October, leaving a thin buffer for winter and pointing to potentially fierce competition with Asian markets for LNG next summer.

This morning, the front season has added a further 2p/therm at the time of writing, as Houthi claims of overnight strikes targeting Saudi airports in Riyadh and Abha keep the risk premium firmly in place.

Firming in line with natural gas, baseload power moved higher on Tuesday as a sharp drop in wind tightened the prompt.

Wind output collapsed from a 40.9% share of the stack to just 9.9%, its weakest in weeks, all while gas-fired generation doubled from 24.8% to 49.8%, pushing renewables down from 58.9% to 32.1%.

The tightness prompted NESO to issue an Electricity Margin Notice, flagging a 1.88 GW shortfall between 3pm and 11pm, though it was cancelled later in the afternoon.

Imports have tracked the wind, falling to just 4% of supply during the windy start to October before rebounding to 12% on Tuesday, leaving he UK more exposed to Continental tightness while French nuclear availability remains constrained.

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Price commentary courtesy of Crown Gas and Power