Energy Markets Steady Despite Ongoing Hormuz Disruption

Market Update:

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• Wholesale prices along with oil, have taken a sharp up-turn.
• Oil hit $126/bbl overnight, before trading around low $120’s during UK opening. It’s now dropped to $116.8/bbl in the last few minutes
• Win-26 gas has opened at 120p/T. At time of writing, it’s around 116.4p/T.
• A report the U.S. is considering potential military action against Iran to break the deadlock in negotiations to end the war, increasing concerns of more supply disruptions to already curtailed Middle East exports.
• Donald Trump discussed how to mitigate the impact of a possible months-long U.S. blockade of Iran's ports with oil companies, a White House official said on Wednesday, as the U.S. renewed its calls for other nations to help open the Strait of Hormuz.
• The President will receive a briefing on Thursday from the leader of the U.S. Central Command, Brad Cooper, on new plans for potential military action against Iran, Axios reported on Wednesday.
• Another plan expected to be shared with Trump is focused on taking over part of the Strait of Hormuz to reopen it to commercial shipping, the report added, saying such an operation may involve ground forces.
• Another option that might come up in the briefing is a special forces operation to secure Iran's stockpile of highly enriched uranium, Axios said.

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NATURAL GAS:
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Gas prices increased in the afternoon session on Wednesday as late geopolitical risk was pushed into the market. Reports from the US suggested that President Trump was unlikely to agree any proposal by Iran to end the war and that the US military were briefing the President about next course of action.

May-26 contracts are set to expire across Europe today, and even with the contract pushing slightly higher yesterday expiry is likely to be lower than the contract became front month. The NBP May-26 contract is trading at around 118p/therm with TTF at €47.70/MWh.

Unplanned Norwegian maintenance caused an early lift in prices on Wednesday, with the UK and Netherlands seeing lower flows initially. Asgard did resume and mitigated the lost capacity from Sleipner and Gullfaks within day. Norwegian maintenance is set to ramp up from next week, bringing lower flows due to summer maintenance.

The GasLog Savannah LNG carrier unloaded into Gate on Wednesday, ensuring strong LNG into the Dutch grid. There are 4 LNG arrivals expected in the coming week which should boost supply within the country.

German storage is sat at 24% full, with injection rates in April-26, lower than the rates injected during April 25.

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ELECTRICITY:
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The EU commission adopted a new policy on Wednesday, aimed at reducing consumer electricity prices due to the ongoing war in Iran. The “Middle East Crisis Temporary State Aid Framework” (METSAF) will allow a reduction of up to 70% on the yearly average wholesale prices to mitigate the impact of high gas prices on electricity generation.

Generally, power prices tracked higher on Wednesday, following moves across the energy complex with higher gas and coal prices. There is still expectation of stronger wind generation and solar generation, so the front month outpaced the week ahead contract.

In the UK, the N2EX cleared 5 hours with negative prices on Wednesday. Strong solar and wind generation meant that prices between 11am and 4pm dropped as low as -£10/MWh.

Oil prices have risen to their highest level since 2022, as the geopolitical situation in the Middle East escalated with President Trump reported to be unlikely to agree to any proposal from Iran to end the war. The UAE will leave OPEC from tomorrow, taking the 3^rd largest export from the group.

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Latest Price:
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Latest Gas & Power Annual Chart:
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