UK Energy Market Update: 5 October 2026

Talks between the US and Iran broke down again on 4 October. Trump rejected Tehran's latest proposal, and Iran's parliament speaker says the Strait of Hormuz stays closed until seven named conditions are met. The US blockade holds. Both sides have hinted talks could resume soon, but nothing's signed, and the market still isn't betting on a quick fix.

Gas has eased, but don't read too much into it

UK gas is back to around 187p per therm, down on hopes that the diplomatic picture might shift. Worth separating two things here: a short-term dip in prices is not the same as the market deciding this is over. Look at the forward curve instead. Gas for next summer is up 18% to roughly 130p per therm, and Winter 2027 gas has climbed 17% to around 125p per therm. Traders are still pricing in trouble well into next year.

European storage has recovered to just over 70% full, better than the low 60s a month ago, but still short of where it should sit for the time of year. That gap matters if a cold snap or fresh disruption hits before spring.

Power is following gas, but wind did its own damage this week

Gas-fired generation still sets the tone for UK electricity prices, so the pressure in gas is working its way through to power. But gas isn't the only culprit right now. A sharp drop in wind output at the start of October pushed day-ahead power up to around £160 per MWh, against £130 at the end of August. On a still, cold day, weak wind alone can move prices almost as much as the geopolitics does.

Where this leaves businesses

The domestic price cap rise is already in, 4% to £1,723 from 1 October, cushioned a bit by the government scrapping VAT on electricity until March. Business energy has no such cap, and forecasters including Cornwall Insight are now pointing to a further 15 to 30% jump in January, with some putting it above £2,000. If you're coming up to a renewal this autumn, that's the number worth sitting with.