Geopolitical tragedy and folly – Energy price forecast in more global turmoil

Geopolitical tragedy and folly – energy price forecast in more global turmoil

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Energy markets are still reacting sharply to world events, of which there is no shortage right now! conflicts, sanctions, shipping disruptions or political instability in key producing regions. While difficult to predict, these events can trigger sudden price spikes in both gas and power and trigger “risk premiums”.

Even short-lived events can create temporary volatility when demand is highest. They remain the single greatest source of risk premium and sudden price volatility for energy markets in the upcoming quarter. During the peak demand winter season, the global energy system has less slack, meaning that any disruption—real or perceived—is amplified across the supply chain. 

Many would challenge assertions credited to leading political figures in recent times, which implied that energy prices remain 40% higher as a direct result of the Russia/Ukraine conflict. This is arguably misleading, as given our comparatively high non-energy costs, the claim can only be referring to the wholesale element, whilst the actual percentage figure is thought by many to be far lower. Any notion of a swift return to pre-war prices in the event of a peace treaty seems ambitious, particularly in view of the market realignment that would be necessary. 

The Venezuela situation in respect of power prices is fundamentally an oil story, not a gas story. Venezuela produces very little natural gas that flows into major global gas markets like Europe’s, and almost none of its LNG is directly linked into the European network. 

If the transition remains chaotic, or if maritime tensions in the Caribbean disrupt global LNG shipping routes, Natural gas traded at the National Balancing Point (NBP) could see short-term spikes. That said, NBP gas prices opened lower on the Monday following the capture of Nicolás Maduro, before fundamentals took over. 
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In 2025, we saw volatility due to U.S. tariffs, Middle East conflict escalation, Red Sea shipping disruptions and the ongoing Russia/Ukraine war and what 2026 brings remains to be seen!