The UK energy market continues to present a challenging landscape for businesses, with short-term price movements often masking deeper structural risks.

Last week saw a brief softening in gas and power markets, driven by optimism surrounding potential US-Iran peace talks. This reduced some of the geopolitical risk premium that had been priced into the market.

However, that optimism proved short-lived…

Markets have since turned more cautious again, with renewed tensions around the Strait of Hormuz and ongoing uncertainty surrounding global LNG (liquefied natural gas) flows reintroducing volatility.

The key takeaway is clear…

Much of the recent “good news” is already priced into the market.

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What’s Driving the Market Right Now?

While prices remain more competitive than recent peaks, several underlying factors continue to provide support to the market and limit further downside.

1. European Gas Storage Remains Under Pressure

Gas storage levels across Europe are still below typical seasonal norms. This creates vulnerability heading into future demand periods, particularly if refill rates do not accelerate as expected.

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2. Ongoing Middle East Tensions

The Strait of Hormuz remains one of the most critical global energy chokepoints. Any disruption to LNG shipping routes can have an immediate impact on pricing, and current geopolitical uncertainty continues to underpin market risk.

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3. UK Nuclear Outages

Reduced nuclear availability in the UK increases reliance on gas-fired generation, particularly during periods of low renewable output. This structural dependency continues to support gas demand and pricing.

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4. Winter 2026 Supply Concerns

Forward markets remain focused on potential supply tightness heading into Winter 2026. This longer-term concern is a key reason why prices are not falling further, despite softer near-term conditions.

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What’s Keeping Prices in Check?

It’s important to recognise that there are also factors currently helping to limit price increases:

• Strong renewable generation, particularly wind
• Softer seasonal demand during spring and early summer

However, these are short-term influences, and their impact is unlikely to persist throughout the year—especially as demand increases and weather conditions change.

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Sign Now or Wait?

This is the question many businesses are asking, and the answer depends largely on your contract position and risk appetite.

Contracts Due in 2026

For businesses with contracts expiring in 2026, there is a strong case for taking advantage of current pricing levels.

While the market has softened slightly, the underlying risks remain firmly in place. Waiting for further reductions carries the risk of missing favourable opportunities, particularly if geopolitical tensions escalate again.

Our view:
Actively explore options now and be prepared to secure pricing when competitive opportunities arise.

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Contracts Due in Early 2027

For those with a longer runway, the position is more balanced.

There may still be opportunities to benefit from short-term market dips, but this requires active monitoring and a willingness to move quickly when pricing aligns with your strategy.

Our view:
Maintain a watching brief, but be ready to act on favourable trading days rather than waiting for a perfect low point.

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The Reality of Energy Markets

One of the most common misconceptions is that there is a “perfect moment” to secure an energy contract.

In reality, energy markets do not behave that way.

Opportunities tend to be short-lived, and pricing windows can close quickly, often driven by external factors that are impossible to predict with certainty.

Businesses that take a structured, informed approach to procurement are typically better positioned than those waiting for the market to bottom out.

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What Should You Do Now?

If your energy contract is due within the next 12 months, this is a critical window to:

• Review your current contract position
• Understand your exposure to market risk
• Explore procurement options and strategies
• Identify opportunities to secure competitive pricing

The key is not to rush into a decision, but equally, not to delay without a clear strategy.

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How Enexus Can Support

At Enexus, we work with businesses across the UK to navigate complex energy markets with clarity and confidence.

Our approach is straightforward:

• Provide independent market insight
• Benchmark available pricing opportunities
• Support informed, timely decision-making