Prices reach fresh highs as Middle East tensions escalate and European storage falls short.
Summary:
Gas and power prices climbed to their highest levels since 2023 last week, driven by renewed conflict in the Middle East and a widening gap in European gas storage. For UK businesses, that raises the stakes for anyone renewing a contract or exposed to the wholesale market this winter.
What happened:
Gas and power prices broke through to new highs this week, with gas passing its March peak and both curves closing the week at levels last seen in 2023. Fighting resumed after a month long lull. Reports suggest a tanker was hit in the strait on Monday, and on Tuesday the US reportedly struck targets in Iran, with one strike reported to have hit a wedding in the south of the country. Iran reportedly retaliated with missiles at US bases in Bahrain, Jordan and Iraq, the heaviest exchange in over a month, driving the sharpest price moves midweek. Prices eased slightly on Thursday, though a claim that the US Navy is escorting thirty ships a night through the strait was not supported by ship tracking data. Over the weekend the US reportedly struck three Iranian oil tankers after missiles were fired at its warships, and Iran has vowed to respond. Storage remains the underlying problem. European sites are around 62% full against a five year norm closer to 80%, and the gap is not closing: heat across southern Europe kept gas burn high through August, planned Norwegian pipeline maintenance trimmed flows, and Qatari LNG remains held up, with roughly a fifth of global LNG trade normally passing through the strait. At home, record summer solar has taken some pressure off the power market, and ministers are expected to approve the Jackdaw gas field this month, but the gas curve is now pricing a winter with very little buffer. With tensions escalating again over the weekend, the market opens this week at fresh highs.
What this means for your business
If you’re on a fixed contract
- Your current rate is protected for now.
- If your renewal date falls before or during winter, you’re likely to be quoted into a market that is pricing in real supply risk.
- Starting the renewal conversation early gives you time to compare options, rather than renewing under time pressure.
If you’re on a flexible or variable contract
- You’re exposed to these price swings directly, and the market has moved sharply week to week.
- Storage sitting well below the five year average leaves little room for a cold snap or a further supply disruption to push prices higher.
- A clear budget position, and a plan for when you might lock in volume, matters more than usual heading into winter.
Get the full update
Download the full wholesale market update as a PDF for your records Rybeda 7th September Weekly Energy Market Update, or to share with your operations & finance team.
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