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Markets Lift on Global Uncertainty

  • 4 hours ago
  • 6 min read

UK Energy Market Update


July 2026


Market Summary

 

EU gas storage continued to rebuild during July, with inventories rising from around 49% full at the start of the month to 57.1% by 1 August, reflecting a steady but relatively subdued refill programme across the continent. Despite the month-on-month increase, storage levels remained significantly below historical benchmarks, ending July around 11.7 percentage points lower than the same period in 2025 and at their lowest level for this time of year in almost two decades. Injection rates also underperformed seasonal norms, averaging approximately 2.4 TWh/day during July, around 20% below the pace seen a year earlier, leaving EU storage roughly 17 percentage points below the five-year average of 74%. This persistent shortfall maintained concerns over Europe's ability to comfortably rebuild stocks ahead of Winter 2026, particularly given the reduced margin for error should colder weather or supply disruptions emerge later in the year.

 

Middle East tensions remained an important influence on global energy markets throughout July, with the fragile ceasefire between the US and Iran established in June coming under increasing pressure as renewed attacks on shipping in the Strait of Hormuz and fresh military exchanges raised concerns over regional stability. Hostilities intensified during the first half of the month, with reports of tanker attacks, US strikes on Iranian targets and retaliatory action by Iran prompting fears of further disruption to one of the world's most important energy transit routes. While the conflict did not escalate into a full regional supply crisis, uncertainty surrounding Hormuz remained elevated, posing ongoing risks to global LNG and oil flows. As a result, energy markets experienced renewed volatility, with wholesale gas and power prices in the UK finding support from concerns over potential supply interruptions and the prospect of tighter international competition for LNG cargoes ahead of the winter heating season.

 

The appointment of Miatta Fahnbulleh as Energy Secretary in Andy Burnham's new cabinet signalled broad continuity rather than a major shift in UK energy policy. Fahnbulleh, a strong supporter of net zero and clean energy investment, has replaced Ed Miliband while much of the wider energy team remains unchanged, reinforcing expectations of a stable policy direction focused on energy security, electrification and renewable generation. Debate over North Sea developments such as Jackdaw and Rosebank remained active throughout July, with industry groups advocating further domestic production while critics questioned the impact on energy prices and supply security. For wholesale energy markets, the clearest takeaway was ongoing government support for the UK's longer term energy transition and power market reform agenda.

 

Hydrogen remained an important component of the UK's long term energy strategy during July, with several government backed projects moving closer to delivery. Progress included the advancement of the 30MW Barrow Green Hydrogen project in Cumbria and further backing for the sector through a £46.5 million government grant awarded to ITM Power to expand electrolyser manufacturing in Sheffield. Industry groups also called on the new Burnham government to maintain policy certainty and investment support, reinforcing expectations that hydrogen will play an increasing role in industrial decarbonisation and energy security over the coming years.

 

Net Zero News

 

Clean energy accounted for the largest share of new power generation worldwide last year, although the United States' renewed emphasis on fossil fuels continues to present a challenge to global net zero progress.

 

New analysis indicates that Great Britain is unlikely to meet its 2030 clean power target, despite significant growth in renewable energy generation.

 

New data from the Society of Motor Manufacturers and Traders (SMMT) shows that battery electric vehicles (BEVs) made up 30% of all new car registrations in the UK during June.

 

The International Renewable Energy Agency (IRENA) reports that the shift to lower cost renewable energy sources reduced global spending on fossil fuels by nearly half a trillion dollars in 2025.

 

Prime Minister Andy Burnham must place industry at the centre of the clean energy transition.

 

Prime Minister Andy Burnham has been urged to take immediate action on business energy costs, with industry leaders warning that economic recovery will remain difficult while Britain continues to face some of the highest electricity prices in the developed world.

 

Britain’s energy system is coming under increasing strain from extreme summer temperatures, with higher cooling demand coinciding with lower power generation and limited network capacity, according to Ordnance Survey.

 

The Energy Independence Bill comes at a critical juncture for the UK’s energy sector. While it has the potential to shape the next stage of the energy transition, its success will depend not only on how quickly the new system is delivered, but also on how effectively it operates once in place.

 

Britain’s industrial strategy must do more to reduce electricity costs, accelerate grid connections and realise the full economic potential of electrification, according to Energy UK.

 

Prime Minister Andy Burnham has pledged a pragmatic approach to North Sea oil and gas, indicating that existing fields may be expanded as the Government seeks to safeguard jobs, strengthen energy security and support economic growth.

 

Electricity & Gas Prices

 

UK wholesale gas and electricity prices rose significantly through July, reversing the declines seen in June as renewed tensions in the Middle East increased concerns over LNG supply and shipping routes. Additional support came from below average European gas storage levels, slower storage injections and periods of weaker renewable generation, which increased demand for gas fired power generation. Gas markets led the gains, with near term contracts rising by more than 35% over the month, while power prices followed higher due to rising gas costs. Although prices eased from their peaks towards month end as geopolitical tensions showed signs of easing, July was characterised by a much stronger and more bullish market than June.




Oil Market



Brent crude prices strengthened over July, recovering from the weakness seen in June as supply side risks returned to the forefront of the market. Early in the month, renewed tensions in the Middle East increased fears of potential disruption to oil exports and shipping routes, helping to rebuild the geopolitical risk premium that had largely faded at the end of the previous month. Tight product markets, falling inventories and stronger seasonal demand also underpinned prices.

 

Later in the month, bullish sentiment was reinforced by declining US crude stockpiles and growing speculation that OPEC+ may slow or pause future production increases after completing its current programme of output restoration. These developments fuelled expectations that supply could remain tighter than previously anticipated, contributing to further gains in Brent prices.

 

Despite the overall upward trend, volatility remained elevated. Prices periodically came under pressure from higher OPEC+ output targets, improving export flows through the Strait of Hormuz and lingering uncertainty over global economic growth and oil demand. However, these bearish influences were ultimately outweighed by ongoing geopolitical risks and tightening near term market fundamentals.

 

Overall, July was characterised by a renewed focus on supply side risks following the demand driven weakness of June. While concerns over economic growth and increasing production persisted, geopolitical tensions, inventory draws and tighter market conditions helped Brent crude finish the month higher.

 

Carbon Prices



EUA carbon prices remained broadly firm through July, with the monthly average rising to around €82 per tonne, compared with approximately €79 per tonne in June. Prices were buoyed by continued strength in European power markets and growing anticipation surrounding the European Commission's review of the EU Emissions Trading System (EU ETS), with many participants positioning for potential market reforms.

 

Following the publication of the ETS review proposals on 17 July, prices received further upward momentum. Although the reforms included measures aimed at supporting European industry and easing future carbon costs, the proposals were viewed as less bearish than many market participants had feared, prompting a relief rally and reinforcing confidence in the market's longer term supply outlook.

 

However, gains were partially constrained by concerns over weaker industrial activity, industrial competitiveness and the prospect of a slower pace of future supply tightening under the revised ETS framework. Some analysts subsequently lowered longer term carbon price forecasts following the reform proposals.

 

Overall, July was characterised by a modest upward trend compared with June, with carbon markets taking encouragement from regulatory developments and reduced policy uncertainty while remaining sensitive to industrial demand and the future direction of EU ETS reform.

 

Get in Touch

 

Our team are independent energy advisors who provide competitive gas, electricity, and water prices for commercial businesses across the region.

 

Our complete energy management service also includes helping businesses to identify potential savings through energy audits, tax levy rebates and grant funding. We can also help you plan for Net Zero and achieve compliance with our in-house ESOS assessment service.


Contact us for a free initial consultation about your business energy.

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