A Summary

Energy markets have strengthened significantly over recent months, with Winter 2026 gas and electricity contracts rising by 45% and 48% respectively. Much of this increase has been driven by concerns around global gas supplies, lower European storage levels and ongoing geopolitical uncertainty as businesses head into the winter period.

The continuing disruption to LNG flows through the Strait of Hormuz remains one of the market's biggest concerns. Reduced exports from the Middle East have tightened global supply balances, increasing competition for available LNG cargoes between Europe and Asia. With global LNG supply expected to remain below last year's levels this winter, markets are likely to remain highly sensitive to further supply disruptions.

European gas storage is also under increased scrutiny. Storage sites are currently below levels seen at the same point last year, leaving less flexibility should colder weather or additional supply challenges emerge. Attention is already beginning to turn towards next summer, with concerns that Europe may need to purchase significant volumes of gas to replenish depleted reserves, potentially extending price pressures into 2027.

Weather forecasts could offer some relief. Current expectations suggest the El Niño weather pattern may bring milder and windier conditions across parts of Europe, reducing heating demand and supporting renewable generation. However, any prolonged cold spell could quickly increase demand and place additional strain on gas supplies.

Carbon markets have also moved higher, adding further support to wholesale electricity prices. For businesses, the key message remains unchanged: energy markets continue to be shaped by geopolitical events, global supply dynamics, weather conditions and carbon costs. With uncertainty likely to persist, having a procurement strategy that aligns with your organisation's objectives and risk appetite remains as important as ever.