UK Energy Market Report – 16 June 2026
Risk premium drains out of the complex as the US and Iran move towards a deal
UK wholesale energy fell hard at the start of the week. A framework agreement between the US and Iran has pulled the geopolitical risk premium out of gas, power and oil almost overnight.
The move leaves near-term contracts at levels last seen in the spring. Carbon was the one corner of the market to push the other way.
Gas Market
NBP day-ahead settled around 103.55 p/therm, down close to 10 p/therm on the session. The July front-month is trading near 101 p/therm, roughly 16 per cent lower over the week.
The trigger was political, not fundamental. Mediators announced a memorandum of understanding on 14 June, due to be signed in Switzerland on 19 June, that aims to end the Middle East conflict and reopen the Strait of Hormuz. Around a fifth of the world’s LNG passes through that route, so the prospect of it staying open has removed a large chunk of fear from the curve.
Milder weather and stronger wind and solar output added to the slide, trimming the call on gas for power. Continental TTF told the same story, dropping more than 9 per cent to about €42.3/MWh, its lowest since April.
Further out, the picture is calmer. Winter-26 shed roughly 9 per cent but still sits at a premium to summer, and long-dated Cal+2 gas remains in backwardation below the front of the curve. That shape tells you the market still sees today’s tightness as temporary.
| Contract | Price (p/therm) | Change (week) |
|---|---|---|
| Day-Ahead | 103.55 | ▼ 9.4% |
| Jul-26 (front month) | 101.01 | ▼ 16.2% |
| Q3-26 | 102.00 | ▼ 15.8% |
| Winter-26 | 117.40 | ▼ 9.0% |
| Cal+2 (long-dated) | 79.20 | ▼ 3.1% |
Electricity Market
Power followed gas lower, though at a gentler pace. Day-ahead baseload settled near £108/MWh for the return to weekday demand.
The prompt is being held up by the supply side. Both Sizewell B units, Torness 1 and Hartlepool capacity are offline, leaving a thin nuclear stack, while below-normal wind early in the week kept gas plant in the mix. Stronger solar is capping daytime tightness.
Forwards repriced more decisively. The July baseload contract is down around 12 per cent over the week to roughly £92.8/MWh, and Winter-26 eased about 5 per cent. The fall in gas, the main marginal fuel for UK power, is doing most of the work here.
Oil, Carbon and Global Commodities
Brent crude fell more than 4 per cent towards $83 a barrel, a two-month low, as the prospect of the Strait of Hormuz reopening removed the supply-disruption premium. WTI followed to around $81.
Carbon was the exception. EU allowances firmed towards €80 a tonne and the UK ETS gained to about £58, with traders treating cheaper gas as a cue for more coal-to-gas switching and firmer demand for permits.
| Commodity | Price | Change (day) |
|---|---|---|
| Brent Crude | $83/barrel | -4.8% |
| WTI | $81/barrel | -4.5% |
| EUA Carbon (Dec-26) | €80/tonne | +1.7% |
| JKM LNG (front-month) | $16/MMBtu | — |
| TTF Gas (front-month) | €42.3/MWh | -9.2% |
Storage and Supply Outlook
European gas storage stands at roughly 44 per cent full, around 9 percentage points behind this point last year. That gap is the reason the forward curve has not collapsed in line with the prompt.
Injection season is under way, and cheaper gas helps the economics of refilling sites ahead of next winter. The swing factor remains the Strait of Hormuz. If the 19 June signing holds and LNG keeps flowing freely, the downward pressure has room to run. A stumble would put the risk premium straight back in.
What This Means for Your Business
For buyers, this is a genuine window. Near-term gas and power are materially cheaper than a week ago, so anyone with short-dated cover to place will find better numbers today than they saw on Friday.
The forward repricing matters more for budget planning. Winter-26 and the longer curve have come off, which improves the case for locking part of your requirement while the geopolitical fear is draining out.
Two cautions. First, the deal is a framework, not a signed treaty, and the 19 June date could slip. Prices would react quickly if it did. Second, firmer carbon is a reminder that policy costs are heading the other way, which feeds into pass-through contracts over time.
A staged approach, taking some cover now and keeping flexibility for the rest, tends to serve businesses better than betting the whole position on the next headline. To talk through how the latest moves affect your contracts, speak to one of our energy consultants today.
Previous report: UK Energy Market Report – 15 June 2026