What should I know about the energy market and price coverage?
It is important to consider how the energy market behaves. Energy is one of the most volatile commodity markets globally, influenced by factors such as weather, policy decisions and geopolitical events, all of which can have an immediate impact on UK electricity and gas prices.
This helps explain why headlines around price movements are so frequent and why the market can change rapidly.
However, media coverage often focuses on the most responsive parts of the market, such as front-month or day-ahead contracts, to illustrate short-term price changes. While this provides a snapshot of market activity, it may not reflect the full picture, particularly for organisations operating under longer-term contracts.
Although understandable, this practice highlights why seeking the full price details to assess the impacts of disruptive events on your specific energy contract is vital.
How has the Iran war impacted the market so far?
As you have seen in the news, markets have rallied due to the war, with concerns over further escalation adding a risk premium to energy prices.
Recent factors which have led commentators to believe that energy prices will continue to rise – known as bullish factors – include how the Iran war‑driven gas price surges are threatening Ukraine’s ability to sustain imports and rebuild storage. This raises the risk of delayed gas injections and tighter regional balances, and keeping gas supported ahead of the next winter season.
Meanwhile, indicators that the prices could experience a downward trajectory – known as bearish factors – include the fact that EU gas storage withdrawals have started to plateau. This has eased further depletion concerns, with markets expecting that the annual dip in gas usage is already underway.
What does this mean for business?
Every organisation is unique in its portfolio and requirements. Therefore, the procurement options available to your business should be considered carefully. Although disruption causes uncertainty, an energy expert can help you navigate the volatile market from an informed perspective in all conditions.
Support for IoH members in business
Understanding how market developments may impact individual contracts often requires access to reliable insight and sector expertise. As the Institute’s energy and sustainability partner, Inspired supports members with access to market information and guidance to help navigate changing conditions.
If you would like to discuss your energy strategy or better understand the current market, please contact the experts at Inspired by email.
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