Energy market volatility continues

Energy markets continue to experience significant volatility, largely driven by President Donald Trump’s social media announcements.

Yesterday illustrated this clearly, as his Truth Social post about “productive” discussions between the US and Iran, along with the decision to delay military strikes, immediately shifted market sentiment from bullish to bearish.

Over the weekend, geopolitical tensions rose sharply after a Truth Social post on Saturday in which Donald Trump warned that unless Iran “fully open, without threat” the Strait of Hormuz within 48 hours, the U.S. would launch strikes to “hit and obliterate” Iran’s power plants, starting with the largest. With the deadline set for Monday evening, Iran responded that any such attack would be met with retaliation against the energy and water desalination facilities of U.S. allies in the Gulf. This drove oil and UK gas markets to open on a bullish note yesterday.

However, late yesterday morning, Trump announced, again via Truth Social, that he had instructed the U.S. military to delay all planned strikes on Iranian energy infrastructure for five days, citing two days of “very good and productive conversations” with Iran. Within hours, Iran’s foreign ministry denied holding any talks with the U.S., describing Trump’s statements as an attempt to lower energy prices and buy time to advance his military strategy.

Near‑term contracts are experiencing heightened volatility as they react sharply to any news about rising or easing geopolitical tensions. In contrast, further‑out contracts are edging slightly higher or remaining relatively stable, as the market factors in the longer‑term consequences of the Middle East conflict. Iranian attacks have knocked out 17% of Qatar’s LNG export capacity for three to five years, signalling prolonged supply pressures for future contracts. Additionally, EU gas storage levels remain low at 28.48% full, making it difficult to refill stocks for the next winter amid ongoing supply disruptions from the war. This is increasing market concerns about the supply-demand outlook for further‑out contracts.

Gas prices eased for near‑term contracts yesterday, with the Summer‑26 contract falling by more than 4% and Winter‑26 declining by around 3%. In contrast, prices further along the curve strengthened, with UK NBP contracts from Summer‑27 onward posting slight gains. The downward trend has continued this morning, with the front‑month contract dropping by roughly 10p/th and Summer‑26 sliding by over 8p/th.

Oil markets also saw sharp declines yesterday, with both major benchmarks losing around 11%. However, prices rebounded by just over 1% this morning amid renewed supply concerns after Iran denied engaging in talks with the United States to help end the war in the Gulf.

Iran carried out another intense strike on Israel and U.S. allies in the Gulf overnight, prompting Israeli forces to launch retaliatory attacks across southern Lebanon and areas around Beirut. This escalation came after Tehran rejected Donald Trump’s statement that the U.S. and Iran were engaged in “productive” negotiations to end the conflict, calling his claims “fake news.” With the Strait of Hormuz still closed and opposing narratives surrounding U.S.-Iran interactions, the Middle East conflict remains unresolved, and markets continue to react sharply to any new developments.

If you would like to talk about the impacts of this developing situation on your business and what these changes could mean, please reach out to our Trading and Risk team directly here.

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