Energy Market Update - November 2025
September and October have seen a period of volatility due to the escalating conflict between Israel and Iran which has seen multiple military strikes from each side. The markets closed at higher than average levels on Friday 25th October as colder temperature forecasts for early November and continued concerns around activities in the Middle East pushed the prices up.
Below seasonal normal temperatures are expected in the coming days may see the start of gas storage withdrawals, although the levels still remain close to 95%, significantly above the mandated threshold of 90% by 1st November.
Market Drivers
Gas
Falling
The outlook on temperature forecasts for November and December has been revised showing an overall warmer position, thus reducing anticipated gas demand for heating. This could limit significant storage withdrawals ahead of the colder winter months, and by extension limit required demand for injections in 2025.
Israel's response to Iranian missile strikes was aimed only at military related targets, easing fears around a stronger response from Iran if oil and nuclear facilities were targeted.
Rising
Total Energies have recently announced delays to several LNG facilities which were due to come online in 2025. The next wave of LNG supply will not be expected until 2027.
Middle East continues to be a supportive element. Israel's response is limiting risk in the near term but the ongoing conflict with Hezbollah and Iranian promises of a response remain a concern.
Electricity
Falling
Limited Interconnector outages over winter and the 500MW Britain-Ireland interconnector is set to launch in December. The Viking Link is also set to expand from 800MW to 1.2.GW in 2025.
The UK continues to show positive developments in the renewable space, with £24 billion pledged to new generation and grid upgrades by private investors.
Rising
UK's waste incinerators have been found to be as polluting as coal-fired generation. They currently make up around 3% of UK generation and the UK ETS may be expanded to cover them, providing bullish signals to UK carbon and by extension fossil-fuelled generation.
The trend of negative intraday power prices continues to be seen across Europe. This could affect the build-out of renewables if developers cannot be certain of a consistent income.
Market Focus
In recent days, Israel launched a series of air and drone strikes on Iran which were aimed at defence and missile production. These strikes were intended to restrict Iran’s ability to attack Israel as well as making the country more vulnerable to future airstrikes. This ongoing hostility between the regional enemies risks bringing the Middle East another step closer to a full-scale conflict. Iran has stated that it will “use all available tools” to respond to the latest attack. Last week, energy prices rose across Europe on concerns around the conflict, but Israel's decision to not target oil infrastructure appears to have eased worries that Israel's response would lead to all-out war in the region. Conflict in the region continues to be a large factor on market costs.
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