Energy Market Update – 18 June 2025
Energy markets advanced further on Tuesday, with gas and power prices rising on heightened geopolitical tensions. The ongoing conflict in the Middle East and tightening LNG supplies were key drivers.
Natural gas prices climbed for a fifth consecutive session, led by concerns over shipping disruptions near the Strait of Hormuz following Israeli airstrikes. With QatarEnergy advising its LNG fleet to delay transit until loading day and two vessels colliding in the area, market fears of restricted LNG exports from Qatar, Oman, and the UAE intensified. This comes amid already tight supply conditions caused by reduced deliveries into Europe and ongoing Norwegian maintenance. The UK’s NBP front-month price rose to 107.60p/therm, up 3.75p from the previous day, while the spot price settled at 94.25p/therm. Flows from Norway into the UK increased by nearly 10mcm/day due to partial restoration at Oseberg, although aggregate European storage remains moderately filled, with the UK system showing demand at 130.40mcm/day and storage net injections continuing. LNG sendout stayed low at 8mcm/day, with only one delivery expected in the coming fortnight.
Electricity prices followed gas higher, driven by fossil fuel costs and supply concerns. UK baseload power for the front month rose to £83.75/MWh, with the day-ahead settling at £87.75/MWh. The market remains supported by tight nuclear capacity across France, where EDF’s Civaux-2 reactor was confirmed to have stress corrosion. This has raised uncertainty about France’s ability to act as a net power exporter through the summer. Weather conditions also played a role, with above-average temperatures expected across Europe and subdued wind generation forecast, although solar output is holding firm. In the UK, gas-fired generation continues to dominate the mix, averaging over 13GW, with nuclear trailing due to outages at multiple plants. Interconnector flows remain volatile, further tightening the market during peak demand periods.
Oil markets strengthened on expectations of prolonged regional instability. Brent crude for front-month delivery rose to $76.45/bbl, up $3.22 from the previous day. The US and UK’s joint military posturing in the Gulf and assertive rhetoric from President Trump contributed to a risk premium in the market. Meanwhile, European carbon markets retreated slightly, with the EU ETS December 2025 contract slipping to €74.64/tonne. UK carbon prices also edged lower to £53.30/tonne. Coal prices moved up, with the API2 Cal-26 contract increasing to $110.41/tonne. These movements reflect overall bullish sentiment driven by geopolitical events and firm demand across fossil fuels and carbon-intensive sectors.