February 2026 Review

When writing monthly reviews, I research and make notes throughout the month that allow the final writing process to be straightforward, with all key points already in place. For this month, almost all of my notes had to be torn up and thrown away on the final day of February when the US declared war on Iran. It is rare that one story has the ability to cause a seismic shift of such magnitude that all other news affecting energy prices seem irrelevant by comparison, but – for the first time since the Russia-Ukraine conflict began – we have a geopolitical event of that level.

Electricity prices for the Summer’26 season had dropped as low as £65.66/MWh in mid-February, but opened up at £79.70/MWh this morning, showing an over 20% increase from this low point. Meanwhile, wholesale UK gas prices are trading 25% higher than when the market closed on Friday. For a business set to consume 10,000MWh of electricity during the summer, this represents a price increase of over £140,000 when comparing today’s price to the February low point.

The month had begun with falling wholesale prices. With weather for the end of February being forecast at levels below seasonal averages and US LNG export levels expected to show a significant increase from the beginning of March, worries surrounding low gas reserve levels were fading and there was an optimism that prices could drop further.

Throughout the month there were brief spikes in the wholesale energy prices when fears of conflict increased, but these spikes were short-lived. As peace-talks progressed there was a growing optimism that military action could be avoided and a diplomatic solution could be reached. Less than 24 hours before the US launched strikes against Iran, it had seemed that a key point of agreement had been achieved when Iran agreed to the demand of not stockpiling Uranium. Whilst this had been a key talking point from the US/Israeli side of negotiations, in hindsight it appears as though this was never the real issue, with Iranian nuclear capability being a prolific headline generator, but not the true cause of their desire for conflict. The US and Israel have been pushing hard for regime change, and it seems like nothing short of this will end any military action.

In the immediate aftermath of the US striking Iran, the Strait of Hormuz has been closed as a shipping route. This will limit the LNG that the UK can receive from Qatar. To contextualise the importance of this, when Russian gas exports to the UK were halted in 2021 wholesale gas prices peaked at 8x their previous levels and were largely above 2x the recent highpoints for a period of 14 months.

The UK imports over 3x as much LNG from Qatar now than it did from Russia in 2021. As such, any sustained disruption to supply could cause catastrophic price increases.

There are 2 ways this can be avoided:

1. Making up the Qatari LNG shortfall through alternative sources

2. A quick resolution to the conflict

The US is producing notably higher levels of LNG than back in 2021 and has a new supply (Golden Pass) commencing production this week. However, the global LNG market is expected to become more competitive with disruptions to shipping from the Middle East, and prices will rise.

Whilst President Trump has optimistically stated he believes operations should be concluded within 4 weeks, historically, US attempts at regime change in the Middle East don’t always go to plan. Airstrikes alone will be unlikely to achieve US/Israeli goals, and even after key personnel and targets have been eliminated there is a high likelihood of insurgency threats continuing. Exactly how this type of threat will impact shipping routes is unclear and will need to be monitored closely.

February 2025 Review

by Craig Watson • 27 March 2026

With consumer spending declining and OFGEM raising their price cap, you would be forgiven for seeing February as a month where negative news was at the forefront, but in the energy markets, this was not the case.

2024 Review

by Craig Watson • 27 March 2026

In a year that began with falling energy prices, there were recurring catalysts that led to prices climbing steadily higher. Geopolitical uncertainty and the perennial threat of escalating conflicts meant fear would maintain a constant presence in the wholesale markets. We will look back at the key energy stories from 2024, and how the energy markets are likely to shape up in 2025. Quarter 1 The year began with cautious optimism as the UK’s gas reserve levels were healthy and prices for the Summer’24 season were in freefall. In February, prices pulled back to their lowest levels since 2021, and for the first time in a while, we identified that there was greater potential for upside risk than for further downward price movement: “ there now (exists) an asymmetrical element of risk should the market encounter a supply-side problem of significance. ” During February we had advised customers on flexible contracts that this was an ideal time for making purchases. March would see prices begin to ascend again as international conflict would create problems with LNG imports, and we would highlight the geopolitical risks as an area for concern moving forwards: “ fears remain and there are potential negative catalysts that could lead to prices rising further, with the main factors to watch out for being based on geopolitical unrest. “ For a business that purchases their energy in advance, this quarter was the optimal time for purchasing during 2024. In February, electricity prices for Winter’25 were down to 7.75p/Kwh, and as low as 6.05p/Kwh for Summer’25. Winter’25 ended the year with prices above 11.1p/Kwh, with Summer’25 prices exceeding 9p/Kwh. For a company that uses 500,000Kwh of electricity per month, the difference between buying at the February low point compared to today’s prices would represent a yearly saving of over £200,000.

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February 2026 Review