Since our last update, UK gas and power price movements have seen sustained bullish movement, as hopes for a peaceful resolution to the Hormuz crisis were apparently dashed once again. Gas for delivery during September 26 hit a 3-week high on Monday 10th, with the Winter 26 contract following suit; both periods have tested the psychologically significant 150p/th threshold. Power contracts also hit recent highs, with front month and front season contracts trading above £120/MWh. Brent crude tested $90/bbl earlier in the week, with Europe’s key gas benchmark, the TTF, breaching the €60/MWh mark.
On Friday, US Treasury Secretary Scott Bessent had suggested a ceasefire between the US and Iran was imminent. Bessent said that “we have them by the throat, and they’ve got 150–180% food inflation, not able to pay the troops. I think shortly, maybe even today, tomorrow, we are going to see an agreement, a 30- to 60-day ceasefire, and the Strait will be open. Energy prices should come down.” US President Donald Trump also told reporters that “I think it’s going to end pretty soon. I don’t think they can go on much longer.” Despite these assurances, Monday 10th saw the largest one-day surge in prices in five months, with the front month contract gaining 10%. Iranian Foreign Minister Abbas Araghchi signalled a hardening line from Tehran, stating the Strait of Hormuz “would not reopen until Washington met certain conditions, including easing sanctions on Tehran and paying war reparations”, according to Al Jazeera. The Iranian regime also reshuffled several senior security officials, signalling the rise of hardline voices in Tehran; among new appointments were Mohsen Rezaee, the former commander in chief of the IRGC, who was appointed as secretary of the Supreme National Security Council.
Monday also saw an unwelcome tightening of winter supply from Norway, as a planned maintenance-related outage at Ormen Lange field was extended for four months. The 8.9mcm/d outage was originally scheduled to run from 13th July to 1st October 26. However, Norwegian gas system operator Gassco revised details of the outage, indicating it will now run until 1st February 2027. Extrapolated across the 124 days of outage, the 8.9mcm/d impact equates to around 11 LNG cargoes.
Europe’s aggregated gas storage fullness remains stubbornly below 60%, sitting at 59.4% as of the latest AGSI data. This is the lowest fullness level for the year since records began in 2014, down 13% on last year’s level and 16% against the 12-year average. Refill rates are also markedly slower than those set during the 2025 injection season. However, it should be noted that following the crisis of 2022, Europe’s absolute gas demand has also dropped materially, so comparison with previous years should be treated with caution.
Vessel traffic through the Strait of Hormuz fell to a one-week low on Tuesday 11th, with just 11 transits recorded, less than 10% of the typical pre-war levels. In the Bab al-Mandeb strait, four crew members of the Egyptian-owned cargo ship Tihamah have been killed in an attack by Iran-backed militia the Houthis, according to Yemen’s transport ministry.
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