Diplomatic activity around the Gulf was busier than at any point in recent weeks, yet UK gas spent the week setting fresh long-term highs, with front month gaining more than 10% between the closes on Wednesday 21st October and Tuesday 27th October. Foreign ministers met in Istanbul, Saudi, Pakistani and Turkish officials travelled to Tehran, and Qatar’s Emir Sheikh Tamim bin Hamad Al Thani met Iranian President Masoud Pezeshkian in Moscow, but none of it produced an agreement, a joint statement or any change to transit through the Strait of Hormuz.
The market appeared to weigh the other side of the ledger more heavily. The New York Times and The Atlantic reported that the US and Israel were drafting plans to resume strikes on Iran after the US midterm elections on 3rd November, with Iranian energy infrastructure among the potential targets, while CNN reported that US forces could launch large-scale strikes within 96 hours of an order.
Front month (November) UK gas closed at 237p/th on Tuesday 27th October, up 10.2% on the week, and opened at 241p/th on the morning of Wednesday 28th October. Q1 27 gas rose 9.3% to 235p/th. In power, front month closed at £192/MWh, up 13.6%, and Q1 27 was 8.6% higher at £189/MWh.
Day-ahead power showed how heavily the UK balance depends on the weather, falling £120/MWh to £39/MWh on Friday 23rd October amid strong wind generation, then climbing to £214/MWh on Wednesday 28th October as wind was forecast to drop to around 4GW against a seasonal normal of around 10GW. Brent reached $114/bbl on Friday 23rd October, its highest since May, and the TTF was trading at €97/MWh on the morning of Wednesday 28th October, within sight of €100/MWh.
Where last week’s story was the strength of the far curve, this week the front led. Summer 27 gas gained a more modest 4.2% to 175p/th, and gave back 5p/th on Tuesday 27th October, when losses were more pronounced further along the curve. That should not be read as the market betting on a quick resolution. A survey of 19 LNG market participants by Argus Media found that some firms, having previously assumed a rolling one-month delay before Hormuz flows recovered, now expect disruption to continue until September 2027, and International Energy Agency Executive Director Fatih Birol said he could not see “any credible pathway” back to pre-war market conditions next year.
Iran’s stance on reopening the Strait remained contradictory. Its Ambassador to Pakistan said Tehran would reopen the waterway if Washington lifted its naval blockade of Iranian ports, while the IRGC-aligned Tasnim News Agency rejected any such link. US President Donald Trump accused Iran of “making up fake hits, mines, and everything else” to push up oil prices ahead of the midterms, a reference to a run of unverified claims by Iran’s Islamic Revolutionary Guard Corps of vessels striking mines.
Qatar’s own behaviour says a good deal about how long the disruption is expected to last. QatarEnergy, once the world’s foremost LNG supplier, signed agreements to buy 4 million tonnes a year of US LNG from Cheniere between 2031 and 2054, and is in advanced talks with Venture Global over at least 3 million tonnes a year. It also extended force majeure on deliveries to Italy’s Edison until the end of December, affecting three further cargoes under a contract equivalent to roughly 10% of Italian gas consumption.
Back in Europe, gas storage stood at 74.93% fullness on 26th October against around 83% a year earlier, with injections and withdrawals close to balancing out as the refill season drew to a close. Germany remained the least full of the larger holders at 61.65%.
On the speculative side, Investment Funds added 20.1TWh of bullish TTF positions and 5.8TWh of bearish ones in the week to Friday 23rd October, lifting their net long position by 14.3TWh to 207.4TWh. That is a second consecutive weekly increase, taking net length above the 193.1TWh of the previous week, itself the highest since mid-September, and suggests funds are continuing to rebuild their bets on higher prices.
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