Renewed conflict in the Middle East and fresh attacks on Ukrainian energy infrastructure pushed prices higher, while storage and supply security remained firmly in focus.
Brief Recap of June
A tentative ceasefire between Iran and the US helped energy prices ease during June, despite continued fighting elsewhere in the region, particularly between Israel and Hezbollah in Lebanon. Temperatures also climbed through the month, averaging around 27°C during the last fortnight seeing power demand rise for air cooling requirements.
Questions were subsequently raised about the operation of the National Grid during the extreme heat in the week beginning 22 June. Whistleblowers from NESO’s engineering team brought to light that their visibility of new renewables projects and outdated tools made modelling very difficult.
This was particularly true of June 23rd which Ofgem are now investigating where constraints were breached, and the power frequency was out of tolerance for nearly an hour. It also brought into question the UK energy security policy of interconnectors with Europe.
Reports suggested that system operators sought around 1,500 MW through international interconnectors between 5pm and 6pm but received only 262 MW. They also called on around 700MW of battery power, halted 800MW of exports to the Netherlands and requested 500MW of emergency assistance from France.
July
Energy prices rose sharply during July, driven largely by renewed fighting in the Middle East and the abrupt breakdown of the ceasefire between Iran and the US. Tensions escalated after US President Donald Trump proposed renewed restrictions and charges on transit through the Strait of Hormuz. Iran reacted with vehement opposition declaring it was their territory and thus fighting resumed.
Significant Russian strikes on Ukrainian gas and electricity infrastructure added another layer of risk. Although these attacks attracted less attention than developments in the Middle East, they remain important as Ukraine becomes increasingly reliant on neighbouring countries and international support to maintain and restore its energy networks.
Wind and Gas were neck and neck for power generation 4.45TWh to 4.2TWh in the favour of Wind. Due to some issues with cooling, Frances nuclear fleet (and other nations) exports to the UK came 4th in the generation race, pipped by Solar to the post with the long sunny days boosting output.
In storage, LNG stocks declined during the month while natural gas storage improved. The rise in gas injections may reflect a wider forward-price spread, giving operators a stronger incentive to place gas into storage now for use later in the year.
Looking ahead August
Norwegian gas maintenance will continue into August, but the 2026 programme is expected to have a lighter impact than in previous years, with fewer planned shutdowns and many outages shorter in duration. Although there are still volumes going offline it is only about 50% of what is usually unavailable.
Geopolitical developments are still likely to provide the greatest source of volatility. At the time of writing, the situation in the Middle East remains fragile and markets are reacting quickly to every military and diplomatic development. Any further disruption to shipping through the Strait of Hormuz or the Red Sea, or renewed attacks on energy infrastructure, could place fresh upward pressure on prices.