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Wholesale energy markets have taken an interesting turn over the past couple of weeks, with natural gas and oil prices beginning to move in different directions.
Following the agreement between the United States and Iran, shipping through the Strait of Hormuz has started to return to normal. This has helped restore confidence across global energy markets and reduced some of the geopolitical uncertainty that had been influencing prices.
However, while oil markets have responded quickly, natural gas continues to face a different set of challenges.
The recovery in oil prices has been driven by the flexibility of global oil supply chains.
Crude oil can often be rerouted relatively quickly, allowing supplies to recover once geopolitical tensions begin to ease.
Natural gas, however, relies on a far more rigid supply network. Much of Europe's gas arrives through fixed pipeline infrastructure or as liquefied natural gas (LNG), making it more difficult to respond quickly to supply disruptions.
As a result, while oil markets have largely normalised following the US-Iran agreement, gas markets remain more sensitive to underlying supply conditions.
Although geopolitical tensions have eased, Europe's gas storage position continues to be one of the biggest influences on wholesale gas prices.
Current storage levels remain around 10% lower than they were at the same point last year and more than 28% below 2024 levels.
This means European countries still need to purchase and inject significant volumes of gas throughout the summer to ensure storage facilities are sufficiently stocked ahead of winter.
How quickly storage levels improve over the coming months will play a major role in determining wholesale gas prices as the market approaches the winter hedging season.
Unlike natural gas, wholesale electricity prices have remained relatively stable.
One reason is the continued reliance on gas-fired power stations to meet electricity demand across Europe.
Recent periods of lower-than-average wind generation and reduced solar output have meant renewable energy sources have contributed less to the electricity mix than expected.
As a result, gas-fired generation has continued to provide much of the electricity supply, helping to keep wholesale power prices relatively steady despite ongoing movements within the gas market.
Several factors are likely to influence wholesale energy prices during the remainder of the summer, including:
These factors will help determine whether current market stability continues or whether prices begin to increase again as winter approaches.
Current market conditions continue to provide opportunities for organisations with energy contracts due over the next 12 months.
While oil markets have stabilised following the easing of Middle East tensions, natural gas continues to be influenced by storage levels and longer-term supply expectations.
For businesses approaching renewal, this reinforces the importance of monitoring market conditions closely rather than focusing on a single market event.
A well-timed procurement strategy can help organisations take advantage of favourable pricing while remaining prepared for any future volatility.
I monitor wholesale energy markets every day, providing expert insight into the factors influencing gas and electricity prices.
By analysing market trends, geopolitical developments and seasonal demand, I help care providers understand when market conditions may present opportunities to review their energy contracts.
Our goal is to help organisations make informed procurement decisions that support long-term financial resilience and reduce unnecessary energy costs.
If your energy contract is due within the next 12 months and you'd like to discuss current market conditions or your renewal strategy, speak to our team today. I can help you navigate wholesale energy markets with confidence and make informed decisions that support your organisation's long-term energy strategy.
