UK Energy Market Update – Forward Prices Surge Amid Geopolitical Tension - 24th June 2025

Geopolitical risks send long-term energy prices soaring – a critical moment for decision-makers.

After weeks of relative calm, the energy market has shifted decisively. Forward gas and electricity prices across 12, 24, and 36-month contracts have surged sharply — signalling a change in sentiment driven not by short-term fundamentals, but by growing fear of long-term disruption.

For UK businesses approaching contract renewal windows, this is a pivotal moment.

What’s Driving the Spike?

Several key factors are reshaping the forward market:

• Rising geopolitical tension, especially in the Middle East, is creating a “war-risk premium.” The potential closure of the Strait of Hormuz — a vital passageway for LNG shipments — would severely disrupt global supply chains.

• Forward pricing is being influenced by risk, not reality. While near-term supply remains stable, the market is hedging against future uncertainty.

• Carbon prices are rebounding, increasing the cost of fossil-fuel power generation across Europe.

• French nuclear concerns and interconnector risks are also weighing on winter 2025/26 forecasts.

The Numbers: What’s Changed?

• The 12-month gas strip is now nearing its highest level since early February

• Electricity forward contracts (especially 12-month deals) have also jumped — hitting their highest point since January

• Both 24 and 36-month terms are climbing fast, as traders build in a risk premium over future market shocks

What This Means for UK Businesses

This is not a reaction to immediate shortages or system failure — it's a reflection of the increasingly fragile global picture.

That makes now a critical moment to act.

At Bright Edge, we’re advising clients to seriously consider locking in energy deals before further risk premiums are priced in. Waiting may mean paying significantly more, even if supply remains technically unchanged in the short term.

A well-timed fixed contract can protect your business from this kind of market behaviour — and still offer flexibility down the line.

Our Recommendation

If your energy contract is due to renew in the next 12–18 months, we strongly recommend considering a fixed deal now. A 24-month term offers:

• Immediate protection from rising forward prices

• Strategic flexibility to re-enter the market if conditions improve next year

• A hedge against worst-case disruption scenarios, like a prolonged Middle East conflict

We’re tracking these shifts daily — and this week’s spike may just be the start if tensions escalate further.

Act now to avoid getting caught on the wrong side of the curve.

Let Bright Edge negotiate your business energy rates & see how much you could save

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