Energy Prices Fall on US-Iran Progress, But Winter Risk Persists

18th June 2026

Markets have softened after a sharp improvement in Middle East sentiment, with the US and Iran moving closer to an agreement and the Strait of Hormuz reopening to maritime traffic. Prompt contracts reacted quickly to the reduced geopolitical risk, with prices falling around 5% at the start of the week. The move offers a potential buying opportunity, but it is being driven by geopolitical relief rather than a structural improvement in supply. European gas storage remains low, Norwegian outages have shown how quickly local fundamentals can move prices, and winter risk has not disappeared. 

Geopolitics pulls prices lower 

The US/Iran conflict continued to dictate price direction last week. On Monday 8 June, retaliatory Iranian strikes on Israel pushed Day Ahead Gas 5% higher at the open, although gains eased to 2.5% within the day after Israel indicated strikes would pause if the ceasefire was not breached further. 

By Tuesday and Wednesday, the market had less Middle East news to price in and took more direction from local fundamentals. Thursday brought renewed tension after President Trump said the US would hit Iran “very hard” following the downing of a US helicopter, but markets stayed relatively flat given the circumstances. On Friday 12 June, when those strikes were called off and a deal appeared closer, prompt contracts fell by nearly 8%. 

That pattern is important for energy buyers. Prices are not drifting lower because risk has vanished. They are responding to fast-changing news flow, and the same sensitivity can work in the opposite direction if negotiations break down. 

Hormuz risk has eased, not gone 

Over the weekend, the US and Iran appeared to move closer to a potential agreement aimed at reducing regional tensions. While talks were complicated by Israeli strikes on Beirut, President Trump urged restraint and suggested that a framework agreement could be reached in the coming days. 

Market sentiment softened as the likelihood of broader regional conflict decreased. Reduced concern over disruption to oil and LNG flows through the Strait of Hormuz helped ease geopolitical risk premiums across energy markets. 

That improvement was reinforced early in the week, with the conflict between the US and Iran appearing to conclude for now and the Strait of Hormuz reopening to maritime traffic. The market response was swift, with prices falling around 5% as risk premiums came out of the near curve. That creates a useful window for buyers, but one that could close quickly if the agreement is breached or the Strait closure becomes a concern again. 

Storage remains the winter concern 

The softer prompt market should not distract from the storage picture. European gas storage is currently 44.34% full, well below the five-year average. If injection rates remain at current levels, Europe is likely to enter the winter months with storage around 70%, well below the previously mandated 85% level. 

That increases Winter 2026 risk. Lower storage means the market has less buffer against cold weather, LNG competition, supply disruption or further geopolitical shocks. Businesses looking at future contracts should treat the current price weakness as a window, not a guarantee that the forward curve will stay comfortable. 

The market has already shown its vulnerability to non-geopolitical shocks. A Norwegian compressor fault announced last week led to a 4% price increase on the day, reinforcing how exposed prices remain to supply-side disruption. 

Front-month gains show the wider trend 

The recent pullback also needs to be seen against the wider move since early January. Gas front month has increased 35.7% since Friday 9 January, while power front month has risen 28% over the same period. 

Even after sharp falls linked to improving sentiment, the market remains materially higher than it was earlier in the year. Waiting for perfect timing can leave businesses exposed to sudden rebounds, especially when much of the current softness depends on fragile geopolitical progress, which has been shown to retract quickly. 

For those with upcoming renewals, the question is less about whether prices could fall further and more about how much unmanaged exposure the business is prepared to carry. 

Contract movements 

The latest pricing data shows broad weakness across near-term gas contracts. Day Ahead Gas moved from 4.15 p/kWh on 11 June to 3.87 p/kWh on 12 June, a day-on-day move of -6.82% and a week-on-week fall of -4.22%. 

Seasonal gas contracts also moved lower. Winter 26 fell from 4.24 p/kWh to 4.01 p/kWh, down 5.42% day on day and 4.64% week on week. Summer 27 moved from 2.96 p/kWh to 2.86 p/kWh, down 3.04% day on day and 1.25% week on week. 

Power followed a similar direction in the prompt and near curve. Day Ahead Power moved from 7.75 p/kWh to 1.94 p/kWh, with a day-on-day fall of 74.97% and week-on-week fall of 80.10%. July 26 power dropped from 10.56 p/kWh to 9.91 p/kWh, down 6.29% day on day and 3.77% week on week. 

Further out, movements were more mixed. Winter 28 and Winter 29 power showed small day-on-day gains, while Summer 32 rose from 6.52 p/kWh to 6.55 p/kWh. That suggests the market has responded most strongly to immediate geopolitical relief, while longer-dated contracts remain cautious. 

Traders’ View 

The recent weakness should be treated as an opportunity to reduce risk, particularly for businesses with upcoming renewals or open positions across Winter 25, Summer 26 or Winter 26.  

Prices have fallen on improved geopolitical sentiment, but the underlying risks have not disappeared. European storage remains below normal, Winter 2026 exposure is still a concern, and the market remainssensitive to disruption across the Middle East, Norway or wider supply routes. 

Buyers should review their exposure while the market is still reflecting reduced risk premiums. Where budget certainty matters, locking a proportion of demand now could help protect against another spike if the agreement fails. A staged purchasing strategy may still be appropriate, but leaving positions fully open carries clear risk in a market that remains highly reactive. 

For live support on your purchasing strategy, contact NGP’s trading desk at [email protected].