Energy Market Report - 10 March 2026
Energy markets sold off sharply on Tuesday morning after President Trump signalled overnight that the Iran conflict could end "very soon," triggering a broad repricing of geopolitical risk across gas, power and oil. Despite the scale of losses, significant physical constraints remain in place - the Strait of Hormuz is still closed and Norwegian maintenance has intensified - leaving markets caught between softening rhetoric and hard supply realities.
Natural Gas
Prompt NBP fell steeply as traders reassessed the duration of the Middle East disruption. Day-ahead settled at 140.00p/therm on Monday but was indicated near 124.00p/therm on Tuesday morning, while NBP Apr-26 dropped from 143.53p/therm to around 126.53p/therm. TTF followed with the front month shedding roughly €6/MWh. The move was driven almost entirely by Trump's overnight comments suggesting the war was "very complete, pretty much" and his willingness to consider easing sanctions on Russian oil, though Iran pushed back, stating it would not lift its oil blockade while strikes continue. Further along the curve, losses were substantial - Crown's Summer 26 gas offer dropped 35.50p/therm to 117.00p/therm, while Winter 26 fell 31.50p/therm to 112.50p/therm. Losses narrowed further out, with Summer 27 down 14.25p/therm and Summer 28 down 10.80p/therm. For context, the front season had gained 75.7% since the conflict began in late February, so prices remain well elevated versus year-ago levels even after Tuesday's correction.
The physical picture was mixed. UK system demand eased to around 209 mcm/day from 237 mcm/day as temperatures across northwest Europe sat well above seasonal norms - Germany averaging 5°C above. Norwegian flows to the UK dropped materially as new maintenance began at Ormen Lange and Kristin, pulling Langeled down 13 mcm/day to 61.40 mcm/day and Vesterled down 19 mcm/day to just 1.00 mcm/day. The system opened around 8 mcm long regardless, supported by healthy LNG send-out from South Hook (30.00 mcm/day), Dragon (18.80 mcm/day) and Isle of Grain (3.40 mcm/day). European storage sits at 29% with withdrawal rates having slowed noticeably on the back of mild weather. The key question remains whether Trump's rhetoric translates into a genuine ceasefire - the Strait of Hormuz and Qatari gas facilities remain closed, meaning physical supply constraints are likely to persist for weeks even under a de-escalation scenario.
Electricity
Power tracked gas lower across the board, with the sharpest losses at the front end of the curve. UK day-ahead baseload settled at £124.00/MWh on Monday but the forward curve was markedly weaker in early trading. Crown's Summer 26 baseload offer fell £15.50/MWh to £94.50/MWh, while Winter 26 dropped £15.00/MWh to £93.00/MWh. TotalEnergies showed the UK Apr-26 baseload at around £98.00/MWh, down roughly £8/MWh from Monday's settlement. German baseload also fell, with the front month shedding approximately €6/MWh. Further-dated contracts were more resilient on a proportional basis, with Summer 27 baseload down around £1.32/MWh and back curves barely moving, suggesting the market views the current volatility as primarily a near-term risk event.
On the generation side, UK wind output is rising with forecasts pointing to above-average levels over the coming week, which should reduce gas-for-power demand and ease prompt tightness. Nuclear availability remains constrained, however. Hartlepool Unit 2 has been offline since March 2025, both Heysham 1 units are out, Heysham 2 Unit 7 has been down since mid-February, and Torness Unit 2 has been on planned maintenance since January, with further work at Heysham 1-1 from 21 March running through to mid-August. The reduced fleet keeps a floor under baseload pricing and elevates reliance on CCGT, tying power prices closely to gas.
Other Commodities
Crude oil led the sell-off. Brent M+1 settled at $98.96/bbl on Monday - the highest in over three years and up 35.8% since the conflict began - but dropped more than $10/bbl in early Tuesday trading. WTI showed similar losses, retreating from $94.77/bbl. The move represented one of the widest intraday trading ranges since the pandemic, though the Strait of Hormuz remains closed and Iran's refusal to lift its blockade means physical tightness persists for now. Coal prices firmed on Monday, with ARA CIF Cal-27 closing at $131.94/tonne, up roughly 4% on the day and 9% on the week, though the coal complex is likely to ease if gas and oil continue their correction.
Carbon
Carbon markets diverged. EUAs edged up €0.47 on Monday to close at €70.90/tonne, while UK ETS certificates fell sharply - down £2.46/tonne to settle at £38.86/tonne. The EUA-UKA spread continues to widen, with UKAs under pressure from reduced domestic demand expectations and lighter generation loads. Near-term carbon pricing will remain sensitive to residual load expectations and the pace at which the geopolitical risk premium unwinds from the power stack. Sterling held steady at £1.1557/€ and £1.3435/$.
Outlook
The market now faces a critical juncture. If Trump's de-escalation rhetoric proves durable, front-season gas and power contracts have the most room to correct given the scale of the geopolitical premium built up since late February. However, several physical factors limit the downside - Norwegian maintenance at Ormen Lange and Kristin is pulling UK-directed flows lower, multiple nuclear units remain offline through the summer, and critically, the Strait of Hormuz and Qatari LNG infrastructure remain shut even under a ceasefire scenario. Competition for LNG between Europe and Asia could intensify given the disruption, with JKM for April at $21.14/MMBtu. Mild weather and rising wind generation offer near-term demand-side relief, but sustained physical constraints mean the sell-off may find a floor sooner than headline sentiment suggests. Traders will be watching closely for any concrete diplomatic steps beyond rhetoric in the days ahead.