15 October 2026

Weekly Energy Market Update 

Outlook

High gas prices, drought-related constraints on hydro and nuclear generation, and variable wind output have kept short-term power prices elevated this week. Day-ahead prices across several North-West European markets have again exceeded €200.00/MWh for delivery tomorrow, while UK baseload cleared at £177.37/MWh on N2EX. These pressures are also supporting forward prices, alongside tight LNG supply and escalating geopolitical tensions in the Middle East. Attacks on tankers around the Strait of Hormuz have intensified over the past week, while the wider conflict in Yemen and further attacks in Saudi Arabia are adding to regional uncertainty.


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General Context
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The UK economy grew by 0.1% in August, beating expectations of a 0.1% contraction, while growth in the three months to August accelerated to 0.7%, supported by stronger services output, particularly in technology.

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The dollar retreated from an 18-month high today, reversing earlier gains driven by stronger-than-expected US inflation. Cautious comments from Fed officials reduced expectations of an October rate hike, while falling Treasury yields weighed further on the currency.

Oil

Brent crude remains volatile but is little changed from last week, with price movements driven by escalating supply risks in the Middle East rather than any significant shift in physical market balances.

Goldman Sachs estimates Brent carries a $24/bbl geopolitical risk premium, despite Persian Gulf exports recovering to their 2025 average, reflecting concerns over further supply disruptions, low global inventories and strong physical and financial hedging demand.
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Gas & Power
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UK carbon prices reached an eight-month high of £66.75/tonne this week, following confirmation that UK and EU leaders will discuss carbon market linkage at a summit on 20th November. On the EU side, pressure from industry to suspend the EU ETS until the conflicts in Ukraine and Iran end could fuel renewed demands for reform at this week’s European Council meeting.

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LNG deliveries to Europe are expected to increase in the coming weeks, as higher European gas prices, driven by low storage levels (currently at 74%) and the ongoing conflict in the Middle East, attract additional cargoes. Shipping data shows that several tankers carrying Atlantic-sourced LNG have changed course and are now heading towards Europe rather than Asia.

Gas

Morgan Stanley has raised its TTF gas price forecast to €90/MWh (225 p/th), assuming a mild winter and a 6% year-on-year reduction in demand. However, prices could reach €135/MWh (335 p/th) if Qatar's LNG exports remain constrained, winter temperatures fall below seasonal norms, or further supply disruptions emerge.

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

North Sea emissions have fallen again

North Sea oil and gas production emissions have fallen for the sixth consecutive year, dropping an estimated 7% in 2025 and 37% since 2018, according to the North Sea Transition Authority (NSTA).

More than half of the latest reductions resulted from active emissions-cutting measures rather than declining production. The regulator continues to enforce flaring and venting controls, issuing £1.7 million in fines since 2021.

With interim emissions reduction targets for 2025 and 2027 already exceeded, the NSTA believes halving emissions by 2030 is achievable. However, further action is essential to meet the 2040 target of a 90% reduction.
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