Wholesale gas and power markets had a rough week. Brent crude jumped more than 6% to $107 a barrel on 11 September, day-ahead gas on the National Balancing Point pushed past 200p a therm, and every contract on the curve, from this winter through to 2028, settled higher than it had the week before. None of this happened in isolation. It’s the latest turn of a story that has been building since the spring, and it’s the one that matters most to anyone in the UK who buys energy by the megawatt-hour rather than the kilowatt-hour.
The short version: Europe is heading into winter with less gas in storage than it has had at this point in the year for at least a decade, at the same time as the Middle East conflict has knocked a meaningful chunk of global LNG capacity offline for years, not months. Put those two things together and you get a market that is pricing risk into every contract currently on offer for delivery this winter and next.
Empty tanks, tight cargoes
EU storage sites were only around 57% full in early August, the lowest reading for that point in the calendar since 2011. Wood Mackenzie has since warned that Europe is at real risk of missing even its relaxed 75% storage target for November, let alone the usual 80% goal for December. That matters because storage is what Europe leans on when cold snaps push demand up faster than pipelines and LNG terminals can deliver it. A thin buffer means more days where the market has to scramble for spot cargoes at whatever price sellers demand, and those spikes tend to ripple straight through to business tariffs.
The supply side isn’t helping. Damage to Qatar’s LNG export facilities during this year’s Middle East fighting, along with disruption to tanker traffic through the Strait of Hormuz, has done more than cause a temporary wobble. The IEA now reckons the conflict will delay the wave of new global LNG supply that was supposed to ease the market by around two years, and puts the cumulative hit to LNG availability between 2026 and 2030 at roughly 120 billion cubic metres, something like 15% of the LNG the world was expecting over that period. A ceasefire in the spring brought prices down from their most extreme peaks, but the underlying damage to Qatari output, expected to take years to repair, hasn’t gone away, and neither has the market’s nervousness about further escalation.
Closer to home, a cluster of planned nuclear outages has added to the tightness at exactly the wrong moment. Heysham 2, Torness and Hartlepool all went into scheduled maintenance windows in the first half of September, taking hundreds of megawatts of low-carbon baseload off the system just as the wider market was jumping on Middle East headlines.
What this means for the UK
On the domestic side, Ofgem has already confirmed the numbers: the household price cap rose 13% for the July-to-September quarter, driven by the earlier spike in wholesale gas, before easing to a smaller 4% rise for October to December. The VAT relief on electricity that kicks in this quarter takes a little of the sting out for capped customers.
Businesses sit outside the price cap entirely, which is exactly why this week’s market moves matter more than they might first appear to. Wholesale forward prices for the 2026/27 winter period have already climbed above 170p a therm, and industry reporting suggests business energy costs are up around a quarter since February for firms buying through this period. There’s a genuine bright spot: the National Energy System Operator expects a healthy 5.5 gigawatt electricity margin this winter, an 8.8% buffer over peak demand. So this isn’t shaping up as a blackout risk. It’s a cost risk, and the pinch is most likely to land on the tight days NESO flags for mid-to-late January.
The practical advice circulating among energy consultants right now is fairly consistent, and it lines up with what the market data is showing: because forward prices are broadly flat out into 2027 and 2028, there’s no obvious dip on the horizon to wait for. A 12-to-24-month fix locked in now avoids absorbing the full winter premium that’s currently baked into short-term contracts, and for businesses weighing up term length, a 24- or 36-month fix often comes out as the cheapest blended rate precisely because it isn’t as exposed to this winter’s spike.
There’s a wider point here too, about resilience. Nuclear employment in the UK has just passed 100,000 jobs for the first time, up 67% in five years, part of a broader push toward generation that doesn’t depend on a tanker making it safely through the Strait of Hormuz. That won’t change anyone’s bill this winter. But it’s the backdrop against which this volatility is playing out: a system still leaning heavily on a global gas market that keeps proving how exposed it is to events thousands of miles from the UK coastline.
For now, the message for anyone managing a business energy budget is a simple one. The wholesale market has already told you what it thinks winter is going to cost. The only real decision left is how much of that risk you’re willing to carry unhedged.