Energy Market Report - 03 March 2026
European energy markets surged as the Middle East conflict escalated sharply over the weekend, with strikes across the Persian Gulf disrupting both LNG and oil supply routes. Gas and power prices posted their largest gains in months, while carbon remained notably disconnected from the wider rally.
Natural Gas
UK gas prices spiked dramatically following the shutdown of Qatar's Ras Laffan LNG facility after a drone attack and Iran's formal closure of the Strait of Hormuz. Day-ahead NBP settled at 114.00p/therm on Monday and was trading above 147p/therm by Tuesday morning - a gain of roughly 78% against Friday's close. The equivalent TTF day-ahead surged to €43.75/MWh, up around 73%. Physical fundamentals offered some cushion, with the UK system opening 12 mcm/day long on Tuesday. Norwegian flows were steady at 318 mcm/day, Langeled nominations rose 14 mcm/day to 66.30 mcm/day, and combined LNG send-out across Dragon, South Hook and Isle of Grain was running at roughly 65 mcm/day. System demand rose to around 228 mcm/day near seasonal norms, though a cooler turn is expected later in March.
Further out on the curve, Summer 26 settled at 103.28p/therm with offers near 131p/therm - now trading at a significant premium to Winter 26 at around 112p/therm. That inversion is a serious concern for storage economics, as it disincentivises European refill ahead of next heating season. EU aggregate storage sits at roughly 30% of capacity, unusually low for early March. If the conflict persists and the Strait remains closed, the global LNG market faces considerable tightening. Asian JKM jumped to $16.48/MMBtu, narrowing the differential that keeps US cargoes flowing to Europe, and Norwegian maintenance scheduled intermittently through June adds a further supply overhang.
Electricity
Power tracked the gas rally with its own amplifiers. UK day-ahead baseload settled at £97.23/MWh on Monday and was offered near £122/MWh by Tuesday morning, while Summer 26 baseload moved from around £70/MWh late last week to above £103/MWh. German baseload followed suit, with Apr-26 up nearly 20% to €88.20/MWh.
Wind generation is falling away across northwest Europe and is forecast to remain below seasonal norms for the next two weeks, pushing gas-for-power demand higher at precisely the point when gas prices are spiking. UK nuclear availability is also constrained - Heysham 1-1 entered a planned outage on 2 March, Heysham 2-7 remains offline on an unplanned trip since mid-February, and Hartlepool 2 has been out since June 2025. On the Continent, French nuclear capacity has been running at the higher end of its seasonal range, helping limit European peak prices. Interconnector flows were mixed, with IUK reversing from a net export of 10 mcm/day to a much smaller 1.90 mcm/day outflow, providing some additional balancing flexibility.
Other Commodities
Brent crude rose to $77.74/bbl, an increase of roughly 9% on the week and the highest level since January 2025. WTI followed at $71.23/bbl. The strikes on Iranian infrastructure and the Strait closure have added a substantial risk premium, though prices remain well below the peaks seen during previous Gulf crises. Coal rallied in sympathy, with the ARA CIF Cal-27 benchmark reaching $121.01/tonne, up around 7% on the week.
Carbon
Carbon was notably disconnected from the wider rally. EUA Dec-26 settled at €70.57/tonne, barely changed on the day and down over 1% on the week. Senior European figures continue to call for reform of the emissions trading system on cost grounds, and that political overhang is capping upside. UK ETS Dec-26 fell to £45.12/tonne, losing a further £1.02 on the session. The UKA-EUA spread remains wide, with policy rhetoric and weak domestic auction demand keeping UKAs under pressure even as the wider energy complex surges.
Outlook
All eyes remain on the Strait of Hormuz and whether Qatar can resume LNG operations - any extension of the current disruption would push prices higher still, particularly if wind generation continues to underperform. The summer-winter inversion on the NBP curve is a structural red flag for European supply security, with storage at just 30% and refill economics working against the market. Norwegian flows are stable for now, but scheduled maintenance through June will periodically reduce pipeline capacity. The severity of this supply shock will ultimately depend on how long the conflict persists and how quickly transit routes can reopen.