Energy Market Briefing

Iran and Oman's foreign ministries said on 26 August they had settled an interim shipping framework for the Strait of Hormuz: inbound vessels heading into the Gulf will route entirely through Iranian waters, while outbound traffic uses a lane crossing both Iranian and Omani territory. The two sides have set themselves 60 days to negotiate a permanent arrangement.

Iran's Revolutionary Guard said a separate deal had been reached on how the two countries will split revenue from the strait, though the joint diplomatic statement stopped short of confirming a final agreement or setting out fees, and Tehran said publicly that the waterway remains effectively closed to normal commercial traffic for now.

Brent crude fell to 86.93 dollars a barrel at Wednesday's close, down around 1% on the day and more than 7% over the week, while UK NBP Win-26 eased 1.0% to 5.58 p/kWh as traders priced in a lower chance of a prolonged closure. UK power held close to flat, down to gas's lead but supported by the still-low storage backdrop.

Qatar has been loading LNG at its highest rate in months at the Ras Laffan complex, positioning cargoes ready for a fuller reopening of the strait, though the facility is still working back from missile damage suffered earlier this year that knocked out around 17% of its export capacity.

Bloomberg reported on 26 August that Kremlin sources say Vladimir Putin has concluded peace talks have reached a dead end and is preparing to escalate the war, including heavier conventional missile strikes on Kyiv and on energy infrastructure in other Ukrainian cities.

Crude pared some of its losses on the Bloomberg report before easing back again as the Hormuz framework news took over as the dominant driver, a reminder that the market is currently weighing two competing supply risks rather than one.

Ukraine's Naftogaz said in mid-August that its facilities had been hit 13 times in a single week, and almost 300 times since the start of the year, continuing a pattern of exchanges that has repeatedly damaged both countries' energy infrastructure through 2026 and adds to the uncertainty around European supply heading into winter.

Ofgem confirmed on 26 August that the price cap for a typical dual-fuel household paying by direct debit will rise 4% to 1,723 pounds a year from 1 October, an increase of 60 pounds a year driven mainly by an 8% rise in gas costs; the regulator pointed to higher wholesale gas prices from the Middle East conflict as the dominant cause.

The rise lands with domestic customers already owing around 6 billion pounds in energy debt as of the end of June, a figure Ofgem expects to reach 7 billion pounds by year end without further action, adding pressure on the government's support package.

Energy Secretary Miatta Fahnbulleh pointed to an expanded 150 pound Warm Home Discount and the wider Warm Homes Plan as the government's response, and noted that removing VAT from electricity bills between October and next March has kept the increase around 45 pounds a year lower than it would otherwise have been.