Energy markets turned sharply higher at the start of March, as escalating conflict in the Middle East triggered a sudden spike in gas and power prices despite otherwise soft supply and demand conditions.
UK power prices surged following US-led airstrikes on Iran, with front-month contracts jumping sharply as markets reacted to geopolitical risk.
Annual power contracts also moved significantly higher, with April ’26 reaching its highest level since last summer as risk premiums returned to the market.
The rally came despite relatively mild weather, strong wind generation, and lower demand, which limited price movements before the escalation.
UK gas prices spiked sharply on short-term contracts after Qatar paused LNG exports amid rising regional conflict.
Forward gas contracts also moved sharply higher, with April ’26 reaching a one-year high as risk premiums returned to the market.
The surge occurred even though UK demand had been running below seasonal averages, showing how geopolitical developments can override otherwise comfortable fundamentals.
Looking ahead, market direction will depend heavily on developments in the Middle East and whether LNG flows resume as normal. While underlying demand remains relatively soft, geopolitical risk is likely to keep volatility elevated.
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