Energy Markets Rise as Iran Conflict Enters Third Week

Market Update:

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• Last week saw prices end the week relatively rangebound.
• This morning, markets have opened higher.
• Brent now sits around $104.6/bbl, down from earlier high of $106.5/bbl.
• No significant Middle East news over the weekend or this morning, that would see an end to the war and easing of prices.
• Trump demands for a coalition to help reopen the Straits of Hormuz, which appears to have fallen on deaf ears.

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NATURAL GAS:
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Today marks the beginning of the 3rd week of the Iran conflict, which is continuing to dominate global commodity markets as talks focus on the current closure of the Strait of Hormuz.

On Sunday, President Trump has warned NATO allies that if they do not help to step in and open the Strait of Hormuz they would face “a very bad future”. Trump also spoke this weekend, commenting that he expects China to help step in and open the shipping route. The Chinese president did not directly respond to the comments, instead calling for peace and a ceasefire as the conflict risks regional and global peace.

The gas market has opened a touch higher this morning, fuelled by the risk that the Middle East conflict continues with a number of countries impacted by drone and missile strikes threatening energy infrastructure.

Updated forecast runs over the weekend remain confident of a ramp up in temperatures for the working week across all North Western Europe. Temperatures could climb as high as 4˚C above average on Wednesday.

Mild temperatures across are set to dominate across the continent and with this Europe will see reduced heating demand, but also wind generation is set to increase early this week..

Oil prices have ticked higher in early trading as the situation in Iran continues. With the Strait of Hormuz remaining closed, prices of Brent have increased to $105/bbl.
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ELECTRICITY:
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The Iran conflict continues to drive markets as it moves into the third week, with tensions building over the weekend as a number of Middle Eastern countries felt the impact of missile and drone strikes. The conflict shows little sign of ending and continues to threaten global energy security.

Power prices have lifted this morning, with front month Apr-26 contract lifting above £100/MWh, with prices taking direction from bullish gas and Oil prices and reduced wind generation for the upcoming period. In Germany, front month Apr-26 is €2/MWh higher this morning in comparison to Friday.

Wind generation is set to be climb today generally, holding well above seasonal average which is helping to offset further gains in the power price. The story is different in Germany, with wind generation falling today to just 24GWh, before climbing in the middle of the week.

The power market is expected to be at the forefront of European policy discussion this week, following calls to help offset the increasing power prices and volatile Carbon markets.

Brent Crude has continued to climb this morning, rising to $105/bbl as the conflict in the Middle East continues, with the Strait of Hormuz still closed for shipping  

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Latest Price:

Sum-26:          £95.5                    £98.5

Win-26:           £98.25                  £99

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Latest Gas & Power Annual Chart:
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