October 2026 Review
October Review
By Adam Novakovic
Energy Markets Consultant
October was a month that saw far more tricks than treats in relation to energy prices. While there were times when the hope of falling prices seemed as though it was on the verge of becoming reality, those hopes never materialised and prices continued to ascend.
Gas prices for December rose by over 30% during the month as fears based on low European gas reserves and difficulties importing LNG led to sharp rises in prices.
The US-Iran conflict remained the single largest driver of market anxiety throughout October. Early in the month, wholesale markets dipped briefly amid rumours that backchannel diplomacy in Doha might establish safe transit corridors through the Strait of Hormuz. However, this fragile optimism shattered following fresh military exchanges mid-month. Direct strikes on logistics hubs and retaliatory naval operations by Iranian forces near key shipping lanes quickly reignited fears over transit security. With Qatari LNG shipments already severely restricted and risk premiums on maritime cargo reaching historic highs, prices surged sharply into the second half of October. By month-end, the breakdown of ceasefire conditions dashed any hopes of a swift resolution, leaving commercial buyers facing sustained, elevated risk across winter contracts.
Speculation that Russian pipeline gas could re-enter European markets provided hopes of an alternative to Middle Eastern LNG. Following reports of diplomatic talks between Washington and Moscow regarding broader geopolitical de-escalation, rumours circulated that partial flows via the undamaged Nord Stream 2 pipeline or Ukrainian transit corridors might be reconsidered to help avert a supply crunch. Hopes were further fuelled by several Central European nations openly lobbying for temporary sanctions relief to mitigate crippling energy costs. However, with firm opposition from key European capitals and no consensus reached, any prospect of Russian gas returning to Europe remains distant.
The government’s Autumn Budget offered faint reassurance, leaving broader structural pressures unaddressed. While the confirmation of domestic VAT reductions to 0% provides welcome relief for charities and small businesses operating below de minimis consumption thresholds, standard commercial users and manufacturers remain paying the full 20% VAT. Beyond headline tax measures, the refusal to make reductions on environmental surcharges means that policy costs continue to account for a substantial portion of standard electricity bills.
Applications for the British Industrial Competitiveness Scheme (BICS) are now officially open, delivering exemptions on the Renewables Obligation (RO), Feed-in Tariffs (FiTs), and Capacity Market (CM) levies. These exemptions can lower annual energy costs by £10,000s for many British businesses. Missing this narrow application window means watching your direct competitors secure substantial cost reductions while your manufacturing operation continues to pay full price. If you want to check the eligibility of your business – or require assistance with the application process – contact SeeMore Energy for assistance with all steps of the process.
Outlook
Geopolitical risks are set to intensify following the US midterm elections. Israeli officials continue to pressure Washington for expanded military action against Iran. With Iranian officials repeatedly rejecting US ceasefire conditions, military analysts widely anticipate a post-election resurgence in hostilities. Any renewed escalation threatening Gulf export terminals will push wholesale gas and electricity rates higher globally.
EU gas storage entered November well below historic levels. With supply deficits preventing large scale autumn replenishment, storage withdrawals will begin earlier than normal. If early winter brings heightened usage, European buyers will be forced into an aggressive bidding war for marginal LNG cargoes, directly driving up wholesale energy prices.
October saw regulators grant approval for Shell’s Jackdaw gas field in the North Sea. While this represents a positive step toward improving domestic energy resilience, first production is not scheduled until late 2027. Consequently, the decision provides valuable long-term stability but delivers zero supply relief for businesses negotiating rates for this winter.
Meteorological models continue to monitor an active Super El Niño pattern. While this historically brings periods of milder, stormier weather to Western Europe, early forecasts suggest harsh, dry, cold spells across November and December. A sudden drop in seasonal temperatures will instantly increase gas consumption and increase buying competition for available LNG supply.
Whether your business is facing contract renewals, seeking protection against upcoming winter volatility, or requiring expert guidance to navigate BICS applications, SeeMore Energy can support you. Contact our team today to conduct a free energy review and see where your energy costs can be reduced.
