Energy Market Briefing

UKMTO confirmed a tanker was hit by an unknown projectile in the Strait of Hormuz on 25 August, the second such strike in a week after the Metro Venetian was struck near Oman on 24 August. The attack landed days after Iran and Oman announced a revenue-sharing agreement on the strait on 26 August, undermining hopes that a workable framework was close.

Iran's security chief Mohsen Rezaei said on 28 August that Tehran is drafting a list of conditions for reopening the strait and wants Washington to act first, while a US source told Al Jazeera the strait is already open, mines are cleared and the naval blockade stays in place. Qatar's prime minister travelled to Tehran on 27 August to try to defuse the standoff.

The US Navy is deploying the USS Theodore Roosevelt carrier group for at least seven months to relieve the George Washington, and President Trump said he is not in a hurry to resume peace talks as the war passes its six month mark. UK gas and power both firmed sharply into Thursday's close on the renewed risk.

Centrica chief executive Chris O'Shea said Britain has almost no gas in storage for the coming winter, warning that time is running out to fix the shortfall. UK storage facilities were around 30% full this week, against 46% at the same point last year and the lowest August level on record.

O'Shea's comments accompanied a push for government backing of a proposed £2 billion investment in the Rough storage site beneath the North Sea, Britain's largest facility, which Centrica says currently costs it £10 million a month to maintain.

The wider European picture is little better: EU gas storage stood at 63.8% full as of 26 August, around 18 percentage points below the five-year seasonal norm for this point in the refill season, keeping a floor under the whole curve into winter.

Wind farms have been paid £1.03 billion this year to reduce output when the grid cannot move their power to demand, Energy Live News reported on 27 August, a rise of around £300 million on the same period last year.

The mismatch between wind generation concentrated in Scotland and demand centred further south continues to force curtailment, with the annual bill forecast to exceed £3 billion by 2027 without new transmission capacity.

Curtailment payments are recovered through network charges and ultimately show up on consumer bills, adding a policy dimension to a UK power market already firm on the back of gas.