March and April have underscored just how sensitive energy markets remain to geopolitical shocks and seasonal dynamics. Escalating conflict in the Middle East sent wholesale prices rising sharply in March, while April brought some respite as ceasefire discussions emerged alongside milder weather conditions and strong renewable output.

However, ongoing uncertainty around the Strait of Hormuz, coupled with upcoming supply constraints, means the outlook for May and beyond remains balanced.

March in review

Looking back at March, it was from the get-go was a turbulent month. The United States and Israel launched a series of strikes on Iran, while Israel also attacked Lebanon, causing prices to soar. The closure of the Strait of Hormuz, a crucial waterway that Iran effectively controls, saw global prices of oil, gas and electricity surge.

Markets didn’t truly settle throughout the month, as the US and Iranian governments contradicted each other on the state of peace talks alongside widespread strikes by Iran on its Middle Eastern neighbours, focused on United States and Israeli interests in the region.

April

April has been a particularly blustery month with wind producing almost double the power provided by gas. As temperatures generally climbed throughout the month, electricity (and gas) demand fell, while solar output increased with the longer days.

On 22nd April NESO announced that between 3:30pm - 4pm, a historic low contribution from gas of only 1.2% was observed. The IFA Interconnector between the UK and France went offline midway through the month, with outages expected to last until mid-May.

Although natural gas storage slightly declined during the month, likely coinciding with Norway’s first maintenance window, LNG storage climbed to near its highest level in the last two years.

Over the course of the month prices gradually softened, particularly after a tenuous ceasefire was announced (and subsequently extended) between the US and Iran. This followed a continuation of the “toing and froing” seen in March over whether a ceasefire would materialise. A ceasefire between Israel and Lebanon was also drawn up, as the Lebanese government seemingly agreed that Hezbollah needed to be disarmed, however this was poorly observed, with strikes continuing.

Dynamics around the Strait of Hormuz shifted dramatically, with the US imposing a blockage on Iranian ports. The logic from the White House was effectively that “if Iran is going to close the Strait of Hormuz, we will close access to the wider world for Iranian vessels.”

Looking ahead to May

The situation in the Middle East is expected to continue. Trump has repeatedly reiterated that a peace deal is close, but this has been a consistent message since the early days of the conflict.

On Monday 27th April, Octopus Energy CEO Greg Jackson appeared on BBC Radio 4’s Today programme, noting that if a swift resolution to the Iran conflict is achieved, then price mitigation for Winter 2026 may still be possible. However, time is running out for this to be made possible.

Some of the larger Norwegian maintenance outages will begin in May, and with global supply already squeezed by disruption in the Strait of Hormuz, May will be an interesting month as we continue to watch what is happening with market prices.