Expert analysis
Energy market outlook: the Middle East continues to drive prices
Current energy market dynamics are clearly being shaped by developments in the Middle East. While fundamentals remain tight, short-term price movements are primarily driven by geopolitical headlines and their interpretation. At this stage, the market is not pricing equilibrium, but uncertainty.
The role of the Strait of Hormuz: apparent reopening, real risk
The most important factor remains the situation in the Strait of Hormuz. Recent developments suggest that while there have been temporary signs of reopening, these cannot be considered a stable normalization. The brief reopening on Friday was quickly followed by renewed restrictions and security incidents. Shipping flows remain disrupted, and insurers’ willingness to take on risk is still limited.
As a result, the market is not seeing a genuine reopening, but rather an unstable and conditional operating environment, which continues to support a high risk premium across oil and gas markets.
Negotiations: positive signals, but no breakthrough
There has been some progress on the diplomatic front, but the overall picture remains unclear. Talks are ongoing, yet no concrete agreement has been reached, and the future of the ceasefire remains uncertain. Meanwhile, military activity continues in parallel.
This creates a familiar market setup: de-escalation appears in communication, while conflict persists in reality. As a result, the market is simultaneously pricing hope and risk.
Gas market: fundamentals remain tight
There has been no meaningful improvement in gas market fundamentals. LNG supply remains uncertain, particularly regarding Qatari capacity, while alternative sources are unable to fully compensate for the shortfall. Norwegian maintenance is also tightening short-term supply.
On the demand side, some easing is already visible, driven by declining industrial consumption and seasonal transition effects. This limits further price increases, but does not signal a reversal.
European storage levels remain below last year’s levels, which poses a risk ahead of the injection season and continues to support prices.
Power market: gas-driven, but influenced by renewables
Electricity prices continue to be largely driven by gas, although other short-term factors are also playing a role. Regional power plant outages and interconnection constraints are tightening supply and supporting prices.
At the same time, renewable generation—especially wind and solar—may provide short-term relief. Stronger wind output and high daytime solar generation are likely to push prices lower during the day, while significant price spikes may still occur in the evening hours.
Carbon market: strengthening trend
The EU Emissions Trading System has been trending upward, driven by improved economic expectations linked to geopolitical easing, regulatory uncertainty, and investor positioning. While currently a secondary factor in energy markets, the overall direction remains moderately bullish.
Overall picture: headline-driven, volatile market
The current market environment is best described as transitional and uncertain. Fundamentals do not support a sustained price decline, yet geopolitical headlines continue to trigger significant short-term movements.
The key questions remain whether the situation in the Strait of Hormuz stabilizes and whether negotiations lead to tangible outcomes. Until clearer progress is seen, the market will remain highly sensitive to incoming news.
Current price levels reflect a dual reality: the market is pricing both the possibility of de-escalation and the persistence of structural risks. This tension is likely to result in continued elevated volatility in the coming period.
Source: Montel News; Reuters
Analysis written by: Tóth Eszter Lilla
20.04.2026.