Price Spikes Following Middle East Escalation
Monday 2nd March has proven to be a volatile day in the wholesale energy markets, with significant price movements driven by geopolitical developments in the Middle East.
In this update, we break down what’s happened, what it means for gas and power pricing, and, most importantly, what businesses should (and shouldn’t) do next.
What Triggered the Price Surge?
Two major developments moved markets sharply:
US military strikes on Iran
Qatar ceasing natural gas production
The second announcement had the biggest impact.
Qatar is one of the world’s largest exporters of liquefied natural gas (LNG), and the volumes affected are comparable to the levels Europe previously imported from Russia before the Ukraine crisis.
Even though there were logistical questions around whether supply would actually be disrupted via the Strait of Hormuz, the cessation announcement alone was enough to send shockwaves through wholesale markets.
Gas Prices Hit Harder Than Power
The most significant movements have been seen in gas markets, though power prices have also risen.
We’re currently seeing:
Front-month gas contracts (April) moving above 100 pence per therm
May and June contracts following similar trends
Near-term quarters and seasons approaching the same 100 pence per therm mark
Further-out contracts trading closer to 50 pence per therm
This creates a sharp divide between short-term and long-term pricing.
What This Means
Businesses exposed to short-term contracts are feeling the biggest impact.
Those with longer-term contracts further out on the curve are currently less affected.
The volatility is concentrated in the “front end” of the market.
We’ve Been Here Before
This situation echoes the early days of the Russia–Ukraine crisis, when markets spiked dramatically and uncertainty drove widespread panic buying.
One of the biggest lessons from that period?
Many organisations locked into long-term contracts at extremely high prices after being told the market would “only go one way.”
In hindsight, those decisions proved costly.
Our Position: Don’t Panic
Unless you have an absolute requirement to contract energy immediately, our advice is simple: Buy time.
Markets are reacting to headlines and uncertainty. Current expectations suggest:
The US campaign strategy may take around four weeks to unfold.
Longer-term stability could depend on wider political developments.
If regional stability improves and Qatari production resumes, markets may correct.
Volatile markets often overshoot before settling.
The worst decisions we’ve historically seen are made under pressure.
Beware of High-Pressure Sales Tactics
When markets spike, some brokers and consultants will inevitably push urgency:
“Sign now or prices will rise another 50%.”
“This is just the beginning.”
“You won’t see prices like this again.”
We strongly advise businesses to ensure they are receiving balanced, well-rounded advice, not fear-driven messaging.
Energy procurement decisions should be strategic, not reactive.
What Should Businesses Do Now?
Review your exposure – Understand your contract position and timing.
Avoid rash decisions – Short-term volatility does not always mean long-term trend.
Seek objective advice – Make sure your advisor is giving context, not just urgency.
Monitor developments – Geopolitical situations evolve quickly.
We’re Here to Talk
Our doors are always metaphorically open.
Whether you’re:
An existing client
A prospective customer
A member of one of the trade associations we support
Or a referral partner
If you want to talk through what’s happening in the markets, including your specific situation, we’re available.
The overarching message today is simple:
It’s volatile.
It’s headline-driven.
And in most cases, the best move is to pause before acting.
If you’d like to discuss your energy strategy or market exposure, get in touch.
