Oil Rises on UAE Attack as Strait of Hormuz Disruption Continues

Market Update:

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• Oil closed just over $100/bbl on Monday and has risen over $3 to $103.5/bbl, on renewed supply fears with the Straits of Hormuz largely shut and U.S. allies rejecting calls to deploy warships.
• A fresh attack caused a fire in the port of Fujairah, a key export terminal where oil loading by state firm ADNOC has been halted.
• Iran launched fresh attacks on the UAE on Tuesday, the kind of strikes on U.S. Gulf allies that President Donald Trump said had not been expected, but which sources said he had been warned about before the conflict.

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NATURAL GAS:
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The European gas markets continue to be dominated by the ongoing conflict in the Middle East, further comments over the weekend provided little clarity on the exact duration of the rest of the conflict. This morning the front month Apr-26 NBP contract is trading at 133.50p/therm with the TTF equivalent at €52.50/MWh. The Sum-26/Win-26 and Sum-27/Win-27 spreads both remain positive at the time of writing.

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.
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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 for the UK.  Strong winds have been providing some good renewable generation to supply over the past few days but this is expected to drop this weekend.

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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.

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 at points on Monday, as the conflict in the Middle East continues. Reports suggest that Trump is setting up a coalition to escort vessels through the Strait Of Hormuz.

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