Geopolitical events remain a major source of volatility and risk in the energy market.
Russian Gas Supply to Europe:
While the UK has limited direct reliance on Russian pipeline gas, any disruption to supply routes or escalation in tensions between Russia and the EU sends ripples across European markets. Even with the prospect of ceasefire talks, intermittent escalations keep traders on edge.
Impact: Further restrictions on Russian gas would intensify competition for alternative sources like LNG, pushing up prices across interconnected European markets, including the UK.
Middle East Tensions:
Recent instability in the Middle East has directly influenced wholesale gas prices. Although the UK imports little gas from the region, the global market is highly interconnected, meaning any disruption — or even the threat of it — drives volatility at trading hubs that shape UK prices.
Recent Events:
In Q3 2025, open conflict between Israel and Iran sent shockwaves through global energy markets. Fears of a potential closure of the Strait of Hormuz — a critical route for liquefied natural gas (LNG) — triggered a sharp but short-lived surge in prices in mid-June. Although disruption didn’t materialise, the perceived risk was enough to add a “fear premium” to wholesale markets.
