Expert analysis
Middle East / Strait of Hormuz: Headline Fatigue
- Hezbollah rejected the proposed ceasefire in Lebanon, further complicating US-Iran negotiations.
- The US launched new strikes against Iranian coastal targets after Tehran deployed drones toward the Strait of Hormuz. Iran responded by targeting US military facilities in the region.
- Markets continue to price in a relatively swift normalization, while several analysts argue that even if a deal is reached, a full reopening of the Strait of Hormuz would not happen immediately.
European Gas Market
TTF continues to trade within the EUR 48-50/MWh range.
- European gas storage sites are currently 41.3% full.
- Injection rates remain below historical averages.
- Asian LNG demand is gradually strengthening.
The key question remains whether Europe can accelerate storage injections during the summer while competing with Asia for flexible LNG cargoes.
EUA Market
EUAs corrected nearly 4% lower this week after the market rejected price levels around EUR 81/t.
- Concerns about weakening European industrial demand are gaining increasing attention.
- Meanwhile, the EU could decide as early as September to stop the automatic cancellation of allowances held in the Market Stability Reserve (MSR).
This would increase the number of allowances remaining within the system over the longer term. - The MSR will remove 190 million allowances from scheduled auctions between 1 September 2026 and 31 August 2027. However, this volume was slightly below market expectations.
- According to media reports, the EU is considering funding a new ETS investment support mechanism. According to ClearBlue Markets analyst Yan Qin, this reinforces expectations that additional allowances could reach the market in the coming years, increasing supply.
- From June onwards, auction volumes are increasing due to the Social Climate Fund. Common auction volumes are roughly 18% higher than during the January-May period. Several analysts see the EUR 76-77/t range as the next natural downside target in the short term.
Power Market
- Germany is expected to experience warmer and drier-than-normal weather over the next two weeks.
- Solar generation is likely to remain strong.
- However, wind output is expected to decline during the second week.
This should remain bearish for spot and front-week power prices in the short term, although fossil generation could regain importance later in the month.- The power market is currently balancing several competing drivers:relatively stable but still bullish gas prices,
- sideways-to-bearish EUA prices,
and a generally bullish weather outlook linked to El Niño effects, including stronger cooling demand and potentially weaker generation fundamentals.
Source:
Analysis written by: Tóth Eszter Lilla
08.06.2026