Business Energy Market Update: May 2026

Across April both power and gas prices saw losses, with the most pronounced movements seen in contracts for delivery in the short term. Day-ahead power fell by approximately 9%, while gas declined by around 7%.

Further out, forward contracts lowered by around 3% for power and 4% for gas. This downward trend was primarily driven by more positive news earlier in the month with Iran signalling a potential de-escalation.

As April progressed however, the markets began to display more bullish sentiment linked to renewed uncertainty around the US and Iran’s relations, and the risk of continued disruption through the Strait of Hormuz. Despite a record 98.8 zero carbon grid on 22 April, a drop off in wind generation also helped push prices higher later in the month. Thankfully, despite the disappointing news coming from the Middle East, prices were not sufficiently boosted to offset the welcome drop earlier in the month.

Further to this, the relatively small movements on contracts for delivery further out seem to suggest that despite what President Trump has recently said about the US attitude to ending the conflict, the markets still see these drivers as short-term in nature.

Despite the relatively muted reaction in the power and gas markets to the latest news on the blockade, there are mounting concerns over the potential for the prolonged closure of the Strait of Hormuz. As has been widely reported, the strait carries 20% of the world's oil and gas supplies, and the news on 30 April that the US is considering a lengthy blockade has understandably sent oil prices soaring. This spike will inevitably feed through to oil and subsequently power so it's likely we may will see some further rises.

Since 30 April the US has suggested further attacks to force Iran to the negotiating table and then a so-called "Maritime Freedom Construct" to combine resources across nations to force safe passage. Iran for its part has remained steadfast in its determination to keep the strait closed to the US and its allies, or alternatively charging a fee for safe passage.

The Government released further detail this month on its British Industrial Competitiveness Scheme, expanding eligibility to include thousands more businesses. While policies aimed at reducing energy costs and improving the competitiveness of British industry are welcome, it appears that farming will remain largely excluded from the current framework. At a time when inflationary pressure continues to build across many western economies, the idea that small businesses, local authorities and farms - those serving communities and producing much of the nation's food - should effectively subsidise the energy costs of large exporting industries is difficult to justify. Energy prices remain elevated across the board, and there is still limited evidence of policy intervention that will deliver meaningful downward pressure on costs in the short term.

As always the team at CUS are on hand to answer any utility related questions so please get in touch on the usual channels.