Looking back at August the US-Iran conflict reached the half-year mark in a prolonged stalemate, with focus shifting from direct military action toward economic and diplomatic pressure. Negotiations over fully reopening the Strait failed, leading the US to reimpose its naval blockade. This followed a period of temporary relief in July when improved conditions around the Strait helped ease global oil and gas prices.

Meanwhile, during the multiple heatwaves the UK relied heavily on gas-fired generation, depleting domestic gas storage as electricity demand for cooling increased. With energy prices remaining high towards the end of the month, replenishing gas reserves ahead of winter continues to prove a major challenge.

While gas was the UK’s largest power source during August at 5.16 TWh, solar was bolstered through prolonged sunshine at around 2.9 TWh contributing around the same as nuclear, behind wind producing 4.84 TWh.

Overall, the generation mix highlighted the impact of unusually warm weather: strong renewable output paired with an increased reliance on gas to meet periods of peak electricity demand.

September

As we moved into September the conflict in the Middle East remain largely deadlocked, with a few escalations that were quickly resolved, returning back to the ongoing stalemate As a result, energy prices continued the upward trajectory established in August. With, several military exchanges taking place early in the month, US held firm on  its naval and economic blockade to restrict Iranian trade, applying additional sanctions to increase economic pressure on Tehran.

Towards the end of September, attention increasingly shifted back to diplomacy. US and Iranian representatives explored proposals under which Iran would reopen the Strait of Hormuz in return for an easing of the US blockade and sanctions.  Despite these diplomatic efforts, no lasting settlement has yet been reached, leaving restrictions on energy flows through the region and the associated risks to global oil and gas markets unresolved.

As a result prices showed some small signs of easing in the second half of the month, they are however, on track to close the month at or slightly above where the month began.

Back in the UK, wind was the our highest source of generation, delivering a total of 8.05 TWh. Gas followed at 4.59 TWh, with nuclear and biomass at approximately 2.9 TWh and 2.56 TWh each, and solar and overseas imports at 1.91 TWh and 1.56 TWh respectively.

While wind performed well, gas generation remains fundamental to balancing the UK grid when intermittent renewables fall short. With gas prices remaining at historically high levels, and both British and European gas storage being very low, there is huge potential for further price spikes as we head into winter.

Looking ahead

Prime Minister Andy Burnham recently announced plans to set up a new publicly owned “Great British Grid” company in a bid to bring UK energy costs in line with European nations within a decade. Operating under the Great British Energy umbrella, this will be the first publicly owned player in electricity networks since privatisation. While this won’t provide immediate price relief, it represents a positive step toward public entities operating within the UK energy sector.

Work on Norwegian gas pipelines continues, though not intensely enough to meaningfully impact pricing. While supply to the UK has decreased, UK exports to Belgium have also reduced, meaning on balance we remain in a net position.

Looking ahead  the US-Iran war remains the greatest influence on future price trends, and the outlook going into October is one of stalled diplomacy and a refusal to accept compromises by either side. The civil war in Yemen has been rekindled as a result of the instability caused by the wider conflict, with Houthi forces advancing along the Red Sea coast, disrupting trade activities at key locations, and seizing control of the Bab el-Mandeb Strait - a vital waterway for energy shipments at a time when the Strait of Hormuz remains closed.

As winter approaches, the UK energy market remains exposed to further volatility. Low gas storage, continued reliance on imports and ongoing geopolitical disruption mean colder weather, weaker renewable output or further supply constraints could quickly put renewed pressure on prices.

For businesses, this makes it increasingly important to monitor the market closely and review energy purchasing strategies early, rather than waiting for conditions to become more challenging.