Energy prices react to tariffs, start and end of ‘Twelve-Day War’

August 2025

Wholesale energy markets in the beginning of the second quarter of 2025 saw steep energy price decreases in response to U.S. President Donald Trump’s tariff announcement, potentially resulting in reduced future global demand for energy. Energy price levels then began to increase slightly as levels initially announced failed to materialise.

Geopolitical shock - The ‘Twelve-Day War’

Then, in June, Israel launched surprised attacks on key military and nuclear facilities in Iran, resulting in increased energy prices again, followed by the United States getting involved further fuelling global commodity supply concerns, because the risk that the Strait of Hormuz through which 20% of the globe oil demand is transported, could be closed by Iran. Then as quickly as it began Donald Trump announced a ceasefire to the ‘Twelve-Day War’, and prices fell back nearing pre-open conflict levels.

UK wholesale gas prices (left) and UK wholesale electricity prices (right) 

Source (left) - ICE UK NBP Natural Gas Futures, 16 July 2025

Source (right) - ICE UK Baseload Power Futures, 16 July 2025

Market volatility in numbers

Over the quarter,  energy prices have been primarily driven by Geopolitical events in the Middle East. From June 10th, over the course of nine days we observed winter gas and electricity prices respectively rising.

Between June 10th and June 19th

  • Winter gas prices rose by 20%, then dropped by 15%
  • Winter electricity prices increased by 14%, then fell by 17%

Smaller price increases followed in late June and early July, reflecting ongoing uncertainty.

Looking ahead - Fundamentals take the lead

Assuming no further geopolitical disruptions, energy prices in the next quarter are expected to be influenced more by traditional fundamentals, including -

  • LNG supply
  • UK and European gas storage levels
  • Temperature-driven demand

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