4 June 2026

Weekly Energy Market Update 

Outlook

Short-term power markets have remained well supported this week, with heatwave conditions, volatile renewable generation and elevated gas prices pushing the German day-ahead contract to €151.86/MWh for delivery Monday 1st June, its highest level since January. Looking ahead, developments in the Middle East are expected to remain the primary market driver, with the risk of renewed military escalation continuing to underpin the geopolitical premium across gas and power markets. Conversely, any credible signs of de-escalation and a reduced threat to shipping through the Strait of Hormuz would trigger a sharp correction in prices, as the market would quickly refocus on the ongoing expansion of global LNG liquefaction capacity.


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General Context
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The UK manufacturing PMI rose to 53.9 in May, its highest level in nearly four years, signalling an expansion in output. However, the improvement was largely driven by the front-loading of orders rather than by underlying demand.

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Meanwhile, eurozone inflation accelerated to 3.2% in May from 3.0% in April, driven by higher energy prices and strengthening the case for an ECB rate rise at its June meeting.

Oil

Brent crude is trading below $100/bbl, retreating from last week’s highs as markets reduced some of the geopolitical risk premium following signs of regional de-escalation. However, supply concerns remain elevated due to ongoing disruptions in the Strait of Hormuz.

The Iraqi government has approved a plan to triple crude exports through Turkey’s Ceyhan port within three months, aiming to reduce reliance on the Strait of Hormuz. The move is intended to offset lost export volumes and support Iraq’s heavily oil-dependent economy.
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Gas & Power
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UK grid operator Neso will cap interconnector trading with France, Denmark, the Netherlands and Belgium at a total of 1.5GW until the end of the year, with each cable subject to a 300MW limit. The decision comes after requests to reverse power flows to balance the UK grid disrupted neighbouring markets.

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UK day-ahead power prices have remained elevated, with N2EX for delivery on Tuesday 2nd June clearing at £111.47/MWh. In addition to strong gas prices and intermittent renewable output, prices have been supported by reduced nuclear availability, with five of the UK's nine nuclear reactors currently offline.

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Loading of a Taiwan-bound LNG tanker at INPEX's Ichthys LNG facility in Australia has been delayed following industrial action by workers that disrupted terminal operations. The disruption highlights potential supply risks at the project, which accounts for around 10% of Australia's LNG production.

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

The next phase of Ofgem’s green power storage scheme is coming

The UK’s renewables story is increasingly about storage, not just generation. Recent progress on the long-duration electricity storage scheme shows how batteries and pumped hydro can help capture surplus wind power and return it to the grid when demand peaks or the wind drops. That matters for energy security, because better storage reduces reliance on imported gas and helps smooth out price volatility. With Ofgem advancing dozens of projects, the UK is taking a practical step toward a cleaner, more resilient power system, one where wind can do more of the heavy lifting, even when conditions are variable.

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