Energy Market Briefing

Iranian state media reported projectiles hitting several areas of Sirik overnight, including explosions in Minab County and on Qeshm Island, as the direct US-Iran exchanges that escalated earlier in the week continued. Iran's Revolutionary Guard Corps has already claimed strikes on US naval vessels, oil tankers and a US-linked base in Jordan this week, while US forces say they destroyed several Iranian oil tankers in response.

President Trump said on Wednesday that he does not expect the war to end before November's US midterm elections, and that oil prices will stay elevated until then, even as he said talks with Tehran remain possible. Iran's foreign ministry said it was open to regional dialogue on Gulf security, but gave no sign of an imminent de-escalation.

Commercial shipping through the Strait of Hormuz remains a fraction of its pre-war level, with daily transits down from more than 100 vessels to around five since Iran began enforcing its own passage permit regime in the strait. Gulf crude exports are running at roughly half their pre-war rate.

UK Winter-26 gas rose a further 4.57% to close at 6.76p/kWh on Wednesday, with Winter-26 power up 3.73% to 15.86p/kWh, as the front two winters and summers all firmed on the day. The move eased further out along the curve, but every season out to Summer-29 closed higher.

TTF front-month gas rose to EUR78.71/MWh on Wednesday, a fourth consecutive daily gain and its highest level since December 2022, as the continuing Gulf strikes kept supply concerns elevated. Brent crude settled above $101 a barrel for the first time since May.

Equity markets weakened on the escalation, with the FTSE 100 down around 1.3% and the Euro Stoxx 50 off 1.6%, while the US 10-year Treasury yield rose to its highest since November 2023. Elevated Gulf-driven oil prices pushed eurozone inflation up to 3.3% in August, and the longer prices stay high, the greater the risk that energy costs feed into broader inflation.

EU gas storage stood at 67.3% full as of 8 September, against a five-year seasonal norm of 85.3% for this point in the year, a gap of around 18 percentage points. External estimates put European storage at its lowest level for the time of year in nearly two decades.

The Commission's winter 2026/27 filling target is 90% of capacity by 1 December, with flexibility for member states to reduce it to a minimum of 80%. Analysts estimate Europe still needs to inject close to 60 billion cubic metres before the season ends to reach even the lower end of that range, a heavier lift than in recent years.

Disruption to Qatari LNG supply through the Strait of Hormuz remains the single biggest drag on the refill effort, leaving Europe more reliant on just-in-time cargoes that the Gulf conflict keeps constraining. Any further hardening of the Hormuz blockade would widen the gap to the norm further heading into autumn.