Markets Ease Despite Global Tensions
- May 13
- 6 min read
UK Energy Market Update
April 2026
Market Summary
EU gas storage moved back into injection mode through April, rising from just over 28% at the end of March to around 33.5% by month-end as milder weather reduced heating demand and the summer refill season progressed. Despite this recovery, inventories remained well below the five-year average of around 46% for this time of year, reflecting heavy winter drawdowns across Europe. Strong LNG inflows into Northwest Europe supported replenishment, but injection rates remained relatively subdued versus historical norms, particularly in Germany, France and the Netherlands. This slower rebuild reinforced concerns over Europe’s ability to comfortably refill storage ahead of Winter-26, amid ongoing geopolitical risks and continued competition for global LNG supply.
Middle East tensions remained a key driver of global energy markets throughout April, although the pace of escalation eased compared with March’s severe disruption. The month was dominated by ongoing stand-offs between the US, Israel and Iran, continued threats to commercial shipping routes, and persistent disruption risks across the Strait of Hormuz and wider Gulf region. While some LNG tanker movements gradually resumed under heavy naval protection, shipping conditions remained fragile, with elevated insurance premiums, longer transit times and periodic rerouting continuing to affect global gas logistics. Concerns also persisted around the security of Qatari LNG exports and wider Middle Eastern energy infrastructure, keeping geopolitical risk premiums firmly embedded across gas markets throughout the month. For UK energy markets, the conflict continued to support stronger wholesale gas and power prices, particularly along the prompt and Winter-26 curves, as traders priced ongoing uncertainty around LNG availability, shipping disruption and tighter global supply competition.
In April 2026, the UK government formally set out plans to reduce the influence of volatile gas prices on electricity costs, marking a significant but partial reform rather than a full decoupling of the market. The announcement centred on two main measures: introducing voluntary long-term fixed-price contracts for eligible low-carbon generators and increasing the Electricity Generator Levy to capture excess profits when gas-driven prices spike. The aim is to shift a larger share of renewable generation away from marginal gas pricing and onto fixed contracts, reducing the extent to which gas sets the wholesale electricity price. However, the reforms stop short of a full structural break from marginal pricing, meaning gas is still expected to play a central role in setting market prices for now. For UK energy markets, the announcement was broadly interpreted as a long-term bearish signal for volatility, with potential to gradually reduce gas-driven price spikes over time, but with limited immediate impact on prompt pricing or contract structures.
The EU moved a step closer to fully eliminating remaining Russian gas imports from its energy system, following the formalisation of legislation under the wider REPowerEU framework. The policy confirmed a phased but legally binding ban, with short-term LNG contracts already being wound down and further restrictions expected to tighten through 2026, ahead of a complete phase-out by 2027. The measures form part of a broader strategy to permanently end dependence on Russian pipeline gas and LNG, including stricter contract rules and enforcement mechanisms across member states.
Net Zero News
Renewable energy accounted for a record share of UK electricity generation in 2025. Government statistics show output from renewable technologies rose 6% to 152.5TWh, reaching a new high and representing 52.5% of total electricity generation.
Europe’s wind fleet is approaching a key turning point as nearly 30% of capacity, around 86GW, is set to reach 20 years of operation by 2030, forcing developers to make critical end of life decisions.
Global energy and financial leaders say the war in the Middle East is creating a substantial, global and highly asymmetric shock, with the most severe impacts falling on lower income countries.
The Government and Ofgem have acknowledged that grid connection reforms are being delayed and face increasing risk, as a surge in battery projects puts pressure on the system.
Wind power generation in Great Britain reached a record 29.2TWh this year, marking a significant milestone in reducing emissions and expanding renewable energy. The increase was driven by sustained high wind speeds during winter storms, allowing wind to meet a larger share of electricity demand and support increased exports.
Ed Miliband will warn that the UK must double down rather than back down on clean energy as ministers move to reduce the link between electricity and gas prices following the latest global energy shock.
Energy reforms aimed at breaking the link between electricity and gas prices have received broad support from industry and campaign groups, but have also highlighted tensions over timing, costs and delivery.
UK based Global OTEC has completed the installation of the world’s first purpose built offshore platform designed to generate continuous renewable energy using the temperature difference between warm surface water and cold deep ocean water.
A new BEAMA 2050 Connected report has highlighted both the scale of emissions reporting challenges facing UK businesses and the increasing resources being allocated to address them
Electricity & Gas Prices
UK wholesale gas and electricity prices eased through April, retracing part of the sharp gains seen during March as market volatility gradually softened. Prices remained influenced by ongoing Middle East tensions and continued concerns around European gas storage and LNG supply security, which kept underlying risk premiums elevated. However, milder weather, improving LNG arrivals into Europe and the transition into the summer injection season helped ease immediate supply concerns. Strong renewable generation and lower seasonal demand also weighed on prompt power markets, while improving storage injections added confidence later in the month. Overall, April was characterised by a softer downward trend as easing short term fundamentals began to offset ongoing geopolitical and structural supply risks.
Oil Market
Brent crude prices remained volatile but eased back from the sharp highs reached during March as immediate supply fears across the Middle East softened slightly. Markets continued to react to ongoing tensions between the US, Israel and Iran, persistent disruption risks around the Strait of Hormuz, and concerns over the security of Gulf energy infrastructure and shipping routes. Elevated tanker insurance costs and continued rerouting of some cargoes kept geopolitical risk premiums embedded in the market through much of the month.
However, bearish pressure emerged as some tanker movements gradually resumed under increased naval protection and fears of a prolonged full scale supply disruption eased. Expectations of weaker global economic growth and softer oil demand also weighed on sentiment, while ongoing strategic reserve availability and stable output expectations from major producers helped improve confidence around near-term supply adequacy.
By month-end, crude markets remained highly sensitive to geopolitical developments, although volatility had moderated compared with March. Overall, April was characterised by a softer but still elevated market, as easing short term supply fears began to offset ongoing geopolitical and structural risks.
Carbon Prices
In April, EUA carbon prices averaged around €74 per tonne, up from March’s average of approximately €71 per tonne. The market remained influenced by broader energy fundamentals, geopolitical developments and ongoing uncertainty around EU climate policy and industrial demand.
Early in the month, carbon prices were supported by elevated gas and power markets, alongside steady compliance buying and geopolitical risk linked to the Middle East conflict. However, bearish pressure gradually emerged as gas and power prices softened through April, reducing the incentive for fuel switching and weakening speculative support across the carbon market. Softer industrial activity across parts of Europe and continued discussion around future ETS reforms also weighed on sentiment, prompting periods of profit-taking and more cautious positioning.
Despite intermittent volatility linked to wider energy market movements, EUA prices generally trended higher across the month. By the end of April, the market remained relatively stable but cautious, as traders balanced longer term decarbonisation expectations against weaker short term industrial demand and softer energy price signals.
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