7 May 2026

Weekly Energy Market Update 

Outlook

When Axios revealed yesterday the contents of a one-page Memorandum of Understanding submitted by the Trump administration to the Iranian authorities, markets reacted immediately: equities rallied, while oil and gas prices fell sharply. Brent and June gas briefly traded below $100.00/bbl and 100.00 p/th respectively. However, optimism faded somewhat after President Trump threatened to resume air strikes if Iran did not sign the agreement, while Iranian officials stated that the document merely reflected US demands and that a deal remained far from agreed. Assuming an agreement is ultimately signed, and the Strait of Hormuz gradually reopens, combined with already weak gas and power fundamentals, European energy prices should continue moving back towards pre-war levels.



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General Context
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The UK services sector expanded further in April, with output recovering modestly after March’s sharp loss of momentum. Manufacturing also showed early signs of improvement, with output, new orders and employment trends all strengthening.

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German industrial orders rose 5% in March, well above forecasts. Excluding large one-off orders, demand remained strong, likely driven by companies bringing forward purchases amid concerns over higher costs and supply disruptions linked to tensions in the Middle East.

Oil

The front-month Brent contract has fallen sharply in recent days, trading below $100/ bbl amid hopes that a new US-Iran proposal could pave the way for a gradual reopening of the Strait of Hormuz.

US crude and fuel inventories fell further as Strait of Hormuz disruptions tightened global supplies and pushed refined product exports to a record 8.2mn bpd. Distillate stocks hit their lowest level since 2005, while gasoline inventories dropped below seasonal averages.
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Gas & Power
Carbon

 

EU climate commissioner Wopke Hoekstra said the European Commission’s July review of the EU ETS will focus on “targeted improvements” while preserving stable long-term carbon price signals. Proposed changes include slowing the phase-out of free allowances for industry, integrating permanent carbon removals into the ETS, and adjusting the system’s annual emissions cap reduction rate (the Linear Reduction Factor) to permit emissions beyond 2040.

Carbon

 

Germany announced up to €5 billion in funding for 2026 to support decarbonisation in energy-intensive industries. The scheme, financed through carbon revenues from EU ETS auctions and national carbon pricing, will cover the cost gap between low-carbon and conventional production over a 15-year period.

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US LNG feedgas demand fell by around 5% week-on-week as seasonal maintenance reduced intake across several export terminals. Cameron LNG saw the sharpest drop, with one liquefaction train likely offline for planned maintenance that could extend through much of May. Corpus Christi was also impacted, although feedgas flows are expected to recover following the completion of the pipeline works.

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

Clean energy is now a price protection strategy, not just a climate one.

The UK government has announced a package of measures to accelerate renewables and tackle the structural link between gas prices and electricity bills, a connection that has kept British energy costs among the highest in the world. Wind and solar are already cushioning the impact of recent gas price spikes tied to Middle East conflict. Organisations still heavily exposed to wholesale gas-linked pricing face growing cost and risk.

For large energy users, this reshapes the conversation around procurement strategy. Fixed contracts, power purchase agreements and renewable investment all look different when government policy is actively working to decouple electricity from gas.
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