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Energy markets remain highly volatile following continued escalation in the Middle East, although prices have eased slightly after the sharp increases seen yesterday.
While the immediate spike has softened, markets have not returned to previous levels and underlying risks remain firmly in place.
For UK businesses and care providers, this means continued uncertainty and growing concern about longer term pricing.
After a sharp rise in prices earlier in the week, markets have fallen back slightly, although not to the extent of the previous increases.
Trading conditions have been erratic, with strong upward movements during morning sessions often weakening later in the day. Frequent price swings reflect a market reacting in real time to rapidly changing developments in the Middle East.
Market participants remain on high alert, with sentiment shifting quickly as new information emerges.
One of the most significant developments is the impact on Qatar’s LNG infrastructure.
Qatar has confirmed that exports from its major Ras Laffan facility could take years to return to previous levels following recent strikes. Prior to the conflict, Qatar was the second largest LNG exporter in the world.
Around 17 percent of its total output has now been taken offline.
This represents a major disruption to global gas supply and is a key reason why markets remain elevated even as short term volatility begins to settle.
The impact of the Qatar disruption is likely to extend beyond the immediate crisis.
Even if the conflict were to de-escalate without further damage to energy infrastructure, the loss of LNG capacity is expected to keep prices above pre-war levels for some time.
Markets are beginning to reflect this longer term risk, with forward pricing curves now showing signs of upward pressure as stakeholders factor in the possibility of prolonged disruption.
This shift is particularly important for businesses planning ahead, as it indicates that pricing risk is no longer limited to the short term.
While oil and gas markets have seen significant increases, the impact on electricity pricing has been more limited.
This is largely due to strong renewable energy generation, which has reduced reliance on gas-fired power.
However, gas prices have risen at almost twice the rate of electricity, meaning there is still upward pressure within the wider energy system.
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There are early indications that efforts are being made to keep the Strait of Hormuz operational, which is critical for global energy supply.
In addition, statements from the US and Israel suggesting no further strikes on Iranian energy infrastructure have helped to ease market concerns in the short term.
However, the situation remains extremely fragile.
Any escalation affecting key supply routes or infrastructure could quickly reverse the recent easing and lead to further volatility, potentially mirroring trends seen during the 2022 energy crisis, although likely on a smaller scale.
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While short term volatility remains high, there may still be opportunities to secure pricing before forward curves move higher.
Energy markets are showing signs of short term stabilisation, but the underlying risks have increased.
The disruption to Qatar’s LNG supply is a significant development that could keep prices elevated for an extended period, even if the wider conflict begins to ease.
For UK businesses and care providers, the key message is clear. While markets may appear calmer on the surface, longer term risks are building and proactive planning is essential.
