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What's Shaking Up the Energy Markets? A Week of Surprises

Global geopolitical events, such as the recent war in Israel, have a profound impact on energy prices, even if they occur thousands of miles away. In this blog, we'll explore how these events directly affect the UK energy market and why it's crucial for businesses to act now.

image that shows an oil drilling rig in the foreground and a war tank in the background, symbolising the link between conflict and energy prices.

The Israel Factor: A Global Concern

The surprise attack on Israel has led to a sharp increase in oil and natural-gas prices. Brent crude futures rose by 4%, hovering around $88 a barrel. This conflict risks further destabilising the petroleum-rich Middle East, causing a ripple effect that directly influences UK energy prices. In just a few days, gas prices jumped from 67.50 p/th on 05/10/2023 to 113.00 p/th on 11/10/2023, underscoring the market's volatility.


The Domino Effect: Understanding the Effects of High Oil Prices

High oil prices don't just affect petrol stations; they have a ripple effect across the entire energy market. When oil prices rise, it often leads to an increase in the cost of generating electricity, which in turn affects business energy contracts. This is particularly concerning given the new Ofgem regulations for business energy contracts, which aim to protect businesses but can't entirely shield them from market volatility.


The Ukrainian Crisis: A Lesson in Energy Transition

The ongoing war in Ukraine has accelerated the shift away from highly polluting fuels towards more sustainable options like renewables and nuclear energy. This transition is vital for reducing dependency on a few major producers and insulating countries from the economic turmoil that geopolitical events can trigger.


The UK Perspective: A Market in Flux

While the UK currently has high energy storage levels, the Israel conflict and other geopolitical events have led to less competitive rates than we'd typically expect in a conflict-free scenario. It's a stark reminder of how even distant geopolitical changes can impact our energy costs here in the UK.


Why Proactive Planning is Imperative

This volatile situation highlights the need for informed, strategic decision-making regarding your energy contracts. With global events causing sudden jolts in the energy markets, staying updated is crucial for businesses. Check out our Daily Market Report and Weekly Market Reports for the latest insights.


Seasonal Demand and External Factors

As we head into the colder months, energy demand naturally rises. However, external factors like the Israel conflict can exacerbate this, leading to even higher prices.


image to show people using heating to warm up symbolising the colder weather coming and increased reliance on gas

Why This Matters for Your Upcoming Renewals

If your energy contract is up for renewal in the next six months, the current geopolitical landscape should be a key consideration. While it might be tempting to adopt a "wait and see" approach, the market's volatility makes it imperative to lock in your energy rates sooner rather than later.


In light of these global events, waiting might not be the wisest option. Utilise our market insights to strategise your next steps effectively. Speak with our dedicated account managers to tailor a contract that best suits your business needs in this fluctuating market. For more in-depth analysis, read our related blog on the Impact of Middle East & Ukraine Conflicts on UK Energy Prices.


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Very helpful, quick expert advice. We have been using Smart Energy for a while.

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Ian Hughes

Operation Manager

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