Understanding Energy Market Volatility and Geopolitical Tensions
Since the start of 2024, energy market volatility and geopolitical tensions has been heavily influenced by a mix of geopolitical tensions and seasonal factors. Global events such as the ongoing conflict between Iran and Israel have added significant uncertainty to the energy sector, resulting in sharp price fluctuations for gas and electricity.
For businesses that rely on predictable energy costs, this market volatility poses a serious challenge. It’s critical to understand how these geopolitical tensions affect energy pricing and how you can plan ahead to protect your business.
The Impact of Geopolitical Tensions on Energy Prices
Recent geopolitical tensions, like as the Iran-Israel conflict, have sent shockwaves through the energy markets. With 200 ballistic missiles launched from Iran and ongoing military tensions, the fear of supply chain disruptions is driving up gas and electricity prices. Since 24th September 2024, gas prices have increased daily from £86.50 p/th to £93.75 p/th, and electricity has also risen daily from £84.75/MWh to £88.25/MWh.
Geopolitical tensions are notorious for creating energy market volatility, as global supply chains are heavily dependent on stability in key energy-producing regions. These price spikes reflect the uncertainty caused by the conflict and the growing concerns about potential disruptions to energy supplies.
The graph below shows the wholesale market movements since the start of 2024 to present day (02/10/2024)
Colder Weather Adds to Energy Market Volatility
As we enter the colder months, businesses and households across the UK are starting to turn on their heating. Increased demand for energy during the winter season only amplifies the existing energy market volatility. The combination of higher energy usage and uncertain supply chains makes it more important than ever for businesses to lock in favourable rates before prices climb even higher.
If you haven’t already prepared your business for the winter season, now is the time to take action. Waiting too long could expose you to even higher costs as demand increases and prices respond to both seasonal and geopolitical factors.
Have you turned on your heating yet?
So have millions of other households and businesses across the UK, and the demand for energy is only going to rise. With energy prices already climbing due to market volatility and global events, it's more important than ever to prepare your business for the winter season.
Managing Energy Market Volatility and Geopolitical Risks
Given the unpredictable nature of both the weather and global conflicts, businesses must be proactive in managing their energy costs. One key strategy is to stay informed about the market by monitoring energy market volatility and tracking geopolitical events that could impact supply.
At The Smart Energy Company, we provide our clients with regular market reports that offer insights into when energy prices are expected to fluctuate and when the best opportunities arise to lock in competitive rates. With our transparent approach, we help businesses stay one step ahead of both the market and global events.
What to Expect as Geopolitical Tensions Continue
As the conflict between Iran and Israel intensifies, and with colder weather on the horizon, it’s likely that energy market volatility will persist through the winter months. The best way to protect your business from these rising costs is to be prepared—monitor the market closely, act early, and stay informed about global events that could disrupt energy supplies.
Get insights from our Weekly Energy Market Reports and make informed decisions for your business.
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