Rising Risks, Market Shifts, and What Businesses Should Do Now.

Over the past week, energy markets have taken a sharp and significant turn. While volatility has been a constant theme in recent months, the last 24 hours in particular have introduced a new level of risk, driven by escalating geopolitical tensions and direct impacts on critical energy infrastructure.

This latest shift is already feeding through into wholesale energy prices, and businesses across the UK are understandably seeking clarity on what it means for their contracts and future costs.

What’s Changed in the Market?

Previously, price increases were largely driven by concerns around transportation and supply constraints, particularly the disruption of LNG (liquefied natural gas) routes. However, the situation has now escalated further.

We are now seeing energy infrastructure becoming direct targets, resulting not only in transportation challenges but also in reduced production capacity.

This is a critical development. It shifts the market narrative from temporary disruption to a more structural concern about supply availability, which has far wider implications for pricing.

Immediate Impact: Sharp Price Increases

The market has reacted quickly.

• Significant increases have been seen in near-term contracts

• Price rises are now extending further along the curve into 2027 and 2028

• Some forward prices have increased by as much as 20–25% in a single day, compared to previous movements of around 5%

This rapid escalation highlights just how sensitive the market currently is to geopolitical developments.

Contracts Due Soon: Consider Short-Term Flexibility

For businesses with contracts due in the coming months, particularly around common renewal periods such as April and October, there is now a stronger case for actively reviewing your position.

Rather than committing to long-term contracts in a volatile market, businesses may want to consider:

• Short-term contracts (e.g. 6 months)

• Maintaining flexibility to reassess as the situation evolves

Locking into a long-term agreement at a time when prices are heavily influenced by immediate risk factors could mean embedding that risk into your costs for years to come.

Longer-Term Contracts (2027–2028): Time vs Risk

For businesses with contracts due further out, the situation is more nuanced.

On one hand:

• Time is still on your side

• There is no immediate pressure to make a decision

On the other hand:

• Prices for 2027–2028 have already risen significantly

• Continued geopolitical escalation could push prices even higher

This creates a key strategic question:

If current prices are still workable for your business, are you prepared to take the risk of waiting?

A Growing Structural Risk: Storage and Supply

Beyond the immediate headlines, there is a deeper concern developing within the market.

Europe and other regions are currently relying on stored gas reserves, which are already at relatively low levels heading into the summer injection period.

If supply disruptions continue:

• Storage levels may not recover as expected

• Markets could enter the next winter in a much more vulnerable position

• Any additional disruption, weather-related or geopolitical, could trigger sharp price spikes

In short, the longer these issues persist, the more risk moves further into future pricing.

Key Takeaways for Businesses

This is no longer a short-term market shock. There is growing evidence that current challenges could evolve into a longer-term structural issue.

Businesses should:

• Avoid panic decisions, particularly under pressure to sign long-term deals

• Explore all contract options, including short-term agreements

• Carefully assess risk tolerance and budget requirements

• Seek balanced, informed advice before making commitments

Final Thought

Energy markets are evolving quickly, and the pace of change has accelerated dramatically in recent days. While uncertainty remains, one thing is clear: businesses need to be more proactive than ever in how they approach energy procurement.

The best decisions will come not from reacting to headlines, but from understanding risk, maintaining flexibility, and aligning strategy with long-term business objectives.

If your organisation has upcoming contract renewals or is reviewing its energy strategy, now is the time to have informed, strategic conversations.