Gas Prices Rebound Despite Progress on Strait of Hormuz Talks

Market Update:

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• Market prices fell yesterday driven by a looser system balance and lower gas for power.
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• A proposed deal between Iran and Oman to help end five months of war between Iran and the United States would give Tehran control over ships entering the Gulf through the Strait of Hormuz.
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• Amid a wider diplomatic effort in the region, Iran and Oman have been engaged in bilateral talks regarding the strait that they each control through northern and southern channels.
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• Oil prices rose on Thursday as investors remained cautious on the outcome of Iran-Oman talks and whether they will restore flows via the Strait of Hormuz, while reports of attacks on Saudi tankers in the Red Sea and Gulf of Aden renewed supply tensions.

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NATURAL GAS:
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Gas prices are rebounding today due to lingering concerns over the outlook for gas supplies, despite risk premiums easing after Iran announced a proposed shipping route agreement with Oman. The agreement, which will see cargoes enter on the Iranian side and leave on the Omani side, is now just waiting for final sign off from Iran's Supreme Leader.
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UK natural gas bounced back above 134p/th this morning from a three-week low. This reverses Wednesday's drops, when the UK NBP Day-ahead price fell to 128.875p/th. In mainland Europe, yesterday's TTF Day-ahead price closed lower at €52.60/MW, touching around €54.50/MW this morning.
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A mid-August heatwave is driving high gas usage for electricity, worsened by low European wind power and the risk of French nuclear shutdowns. As a result, winter preparations are struggling. Europe's gas storage is just under 58% full, the worst seasonal level in nearly twenty years, with Germany lagging at 46.8%.
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Total UK gas demand is forecast at 77 mcm/d today (Power 28 mcm/d, LDZ 46 mcm/d) and 78 mcm/d tomorrow, before dropping to 58–61 mcm/d over the weekend. Demand will surge next week, averaging 80 mcm/d on working days and peaking at 82 mcm/d on Thursday as power generation uses 37 mcm/d.

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ELECTRICITY:
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European power contracts posted losses on Wednesday, tracking gas lower as geopolitical risk temporarily eased. Brent Crude saw high volatility, rallying on Houthi attacks in the Red Sea before settling at $80.16/bbl.
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The UK Q4 2026 baseload contract traded at £114.25/MWh, narrowing its premium to France following strong cross border capacity auctions. On the Continent, French Day-ahead fell to €98.50/MWh, Dutch Day-ahead settled at €102.00/MWh, and German Cal-27 slipped below €100/MWh to settle at €99.65/MWh.
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Elevated temperatures across France, Germany, and the Netherlands continue to drive strong cooling demand and elevated gas for power burn. French heat related nuclear cuts are set to reach near 13% of total capacity today, despite French nuclear output having hit 8 year highs in July.
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Across NW Europe, declining wind generation as temperatures climb is keeping pressure on thermal generation, though strong solar output is helping to offset the wind drop during peak hours.
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In Southeast Europe, record-low river levels along the Danube continue to impact reactor cooling and strain regional balances.

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Latest Price:
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Latest Gas & Power Annual Chart:
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