Expert analysis
Middle East
The market continues to balance between de-escalation and the risk of escalation.
- Washington and Tehran are discussing a 60-day extension of the ceasefire.
- The proposal includes the gradual restoration of shipping through the Strait of Hormuz.
- At the same time, US Defense Secretary made it clear over the weekend that the US is prepared to restart military strikes if no acceptable agreement is reached with Iran.
Brent has corrected by more than 10% and TTF by nearly 5% this week, but the market still does not consider the conflict resolved.
TTF & LNG
Geopolitical de-escalation alone will not solve Europe’s storage refill challenge.
- EU gas storage levels remain around 39%, roughly 8-10 percentage points below last year’s level.
- According to Commerzbank, even if the Strait of Hormuz reopens by the end of July, storage levels may only reach around 70%.
- Meanwhile, Asia is becoming an increasingly strong competitor in the LNG market:
- Asian LNG imports could reach an 11-week high.
- El Niño and summer heatwaves may increase cooling demand and LNG consumption across Asia.
EUA
The Dec-26 contract broke above the EUR 80/t level again this week and reached its highest level in almost four months on Friday.
- Nearly +5% week-on-week gain.
- The rally has been supported by the European heatwave, higher power demand and concerns over potential nuclear generation constraints.
The market is now focusing on three key factors:
- TNAC & MSR
EC is expected to publish the 2025 TNAC figure soon.
This will determine how many allowances the MSR removes from the market. - ETS Reform
The European Commission is proposing to reduce the share of free allocations available to industry from 85% to 75%. - Auction Supply
EEX auction volumes are expected to increase by around 30% next week.
The next key resistance levels are seen around EUR 82-83/t and EUR 85/t.
German power market
- Solar generation is expected to decline from the exceptionally high levels.
- Wind generation is forecast to recover above seasonal norms.
- Increased precipitation in the Alpine region should support hydropower output.
Hungary
The EC has agreed to unlock a significant share of previously frozen EU funds for Hungary.
- EUR 1.5bn is earmarked specifically for electricity grid upgrades.
Meanwhile, day-ahead power prices across Southeast Europe continue to be driven by:
- Reduced nuclear availability at Kozloduy and Cernavoda,
- Weather conditions,
- Cooling demand,
- Renewable generation variability,
- Potential generation and transmission constraints.
Bottom Line
The market is currently pricing:
- Middle East de-escalation,
- Gradual reopening of the Strait of Hormuz,
- Low gas storage levels,
- Increasing competition for LNG from Asia,
- Elevated EUA prices,
- El Niño and weather-related risks.
Source:
Analysis written by: Tóth Eszter Lilla
01.06.2026