Middle East Volatility Opens a New Procurement Window
The Middle East Conflict:
Global Relief for the World Economy or Choppy Waters
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ENERGY CONSULTANCY OF THE YEAR 2025
Publish Date:
July 1, 2026
The Middle East Conflict & The Strait of Hormuz Blockade
The conflict involving Iran and the subsequent effective closure of the Strait of Hormuz in March 2026 represents what the International Energy Agency (IEA) has termed "the greatest threat to global energy security in history."
- Immediate Impact - The Deflation of Risk Premiums: The announcement mid-June of a truce “Memorandum of Understanding” (MOU) triggered a sharp, immediate reversal in global energy sentiment. The 14-point agreement of the MOU was signed on 17th June by the U.S. and Iran, whereby it extends a ceasefire by another 60 days, including in Lebanon, to allow the two sides to negotiate a final truce. However, on 19th June when peace talks in Switzerland were meant to take place, they were called off as Israel stepped up attacks on Lebanon. They did, however, get to the table on the 21st June in what seemed to be productive enough talks.
- The Reality Check: International crude futures plummeted rapidly following the news of a MOU (with main contracts shedding up to 8% in single-day drops), and wholesale gas markets quickly followed suit. The "aggressive risk premium" that was heavily baked into Q3-26 and Win-26 forward curves began to actively dissolve. Additionally, it’s looking like the peace negotiations are going to be volatile with the possibility of them ending at any moment.
- The Procurement Window: For UK business consumers who held off on fixing seasonal contracts during the March-May spikes, the current drop represents the opening of the anticipated downward correction window.
- The Verdict for Q3-26: The immediate threat of a prolonged, total energy blockade through the autumn has seemingly been averted by the MOU. It is, however, a ‘framework’ and there remain other issues still to address, in particular Iran’s nuclear programme. With the Strait re-opening, it will take time for shipping recovery to materialise, meaning prices won’t return to pre-war levels in one hit.
Energy Market Report Q3 2026
How Can Advantage Help?
Our sustainability department continue offer an ever-increasing range of products and technology aimed at reducing energy consumption and associated costs as well as driving down carbon emissions.
We will of course continue to keep you updated around these initiatives, but please do reach out to your designated point of contact should you wish to explore your options in this regard.
In terms of procurement, we will of course continue to monitor markets with a view to helping customers navigate the unprecedented circumstances and ascertain when constitutes the best time to seek a contract extension.
Our popular flexible procurement options continue to be an option for an increasing number of clients on either a standalone basis or as part of a grouped basket. This often facilitates access today/month ahead trading markets which have proved to be particularly beneficial to many clients over the winter period.
BULLISH IN Q3
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IRAN WAR AND GEOPOLITICAL FALLOUT
COMPETITION FOR LNG
LOW EUROPEAN STORAGE
POLITICAL & ECONOMIC INSTABILITY AND UNCERTAINTY
RUSSIA/UKRAINE WAR
RANGEBOUND IN Q3
VOLITILITY & UNCERTAINTY
CARBON
STARMER RESIGNATION
BEARISH IN Q3
US-IRAN DEAL
RE-OPENING STRAIT OF HORMUZ
MILD SUMMER START
WHOLESALE FUTURES PRICES - ‘28 & BEYOND
TRUMP’S TARIFFS
GOVERNMENT RESHUFFLE
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