14 May 2026

Weekly Energy Market Update 

Outlook

Last week’s hopes of progress towards a lasting peace agreement in the Middle East failed to materialise and, with the Strait of Hormuz likely to remain closed or severely constrained for the foreseeable future, global energy markets remain on edge as physical supply shortages increasingly become a tangible risk. Short-term fundamentals have also been supportive this week, with much colder-than-average temperatures across Europe and low renewable output underpinning gas and power prices. For example, UK day-ahead baseload power prices settled above £100/MWh on two occasions over the past week. Looking ahead, developments in the Middle East are expected to remain the key market driver, with the risk of renewed military action likely to continue supporting the geopolitical risk premium across gas and power contracts.



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General Context
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The UK economy expanded by 0.3% m-o-m in March, driven primarily by the dominant services sector. However, economic uncertainty has increased amid rising inflation and growing pressure on the BoE to raise interest rates.

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According to the British Retail Consortium, retail sales fell 3.0% y-o-y in April as weak consumer confidence and fears that conflict in the Middle East could raise living costs weighed on spending.

Oil

Brent is trading back above $100/b after the US rejected Iran’s latest peace response, with the ceasefire increasingly fragile and prospects for reopening the Strait of Hormuz fading.

Cumulative supply losses from Middle East producers have already exceeded 1 billion barrels, while the IEA projects a second-quarter supply deficit of 6 million bpd.
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Gas & Power
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The ongoing interruption to LNG exports from Qatar, combined with planned maintenance at US LNG terminals and colder-than-average temperatures this week, has slowed the pace of gas injections into European storage facilities. Inventories have increased by 3.5 percentage points over the past two weeks and are currently 35.7% full, compared with 43.1% at the same point last year.

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China is set to receive its first direct US LNG shipment in over a year, with three cargoes from Louisiana expected to arrive in mid to late June. Chinese buyers had previously redirected contracted cargoes to other markets due to trade tensions and attractive resale margins amid high global LNG prices.

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A second Qatari LNG vessel has successfully transited the Strait of Hormuz, according to tracking data, with the Mihzem last seen entering the Arabian Sea en route to Pakistan’s Port Qasim. The transit follows the first passage of a Qatari LNG cargo on Sunday since the outbreak of the war. Before that, only two LNG cargoes from the UAE had crossed the Strait, on 27 April and 6 May.

Current Prices
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UK Gas (NBP) - Rolling 12-Month Average
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Sustainability Spotlight

Sustainability Spotlight: The government plans to publish an ‘Energy Independence Bill’.

The government plans to publish an ‘Energy Independence Bill’ to support the UK’s transition from fossil fuels to alternative energy sources, including nuclear and renewables. Ministers also intend to introduce consumer protection measures, including reforms to Ofgem’s remit and powers. The bill is expected to expand Ofgem’s role to regulate third-party intermediaries such as energy brokers.

 

The government has also committed to legislation reforming water regulation. It plans to replace Ofwat with a new body overseeing the water industry’s economic and environmental performance. Together, the reforms aim to strengthen oversight, support consumers and accelerate infrastructure and energy market transition across sectors.
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