Winter 2025/26 was generally mild across the UK, with temperatures well above the long-term average. While it is too early to predict exactly what winter 2026/27 will bring, businesses are entering the new winter period with several factors to watch.
Geopolitical developments, global LNG supply, European gas storage levels, competition for US LNG and the UK’s power generation mix could all influence wholesale energy markets in the months ahead.
For businesses, the key question isn’t simply whether energy prices will rise or fall. It’s understanding what could drive market movements and where potential risks could emerge.
What geopolitical factors are affecting UK energy prices this winter?
The UK has a diverse mix of gas supply, including domestic production, pipeline imports and LNG. However, this does not insulate the UK from international market movements.
Gas is traded through an interconnected global market, meaning developments that affect supply or demand elsewhere can influence wholesale prices in the UK, even when the UK does not rely directly on the affected source of supply.
Iran conflict and the Strait of Hormuz
The ongoing conflict involving Iran and the US continues to be an important factor for global energy markets as winter approaches. The Strait of Hormuz remains a particular focus, as it is a critical route for oil and LNG shipments from the Gulf.
While energy flows through the Strait have increased from the significantly reduced levels seen earlier in the conflict, they remain below pre-conflict volumes, and uncertainty around shipping continues to create additional risk for global energy markets.
For the UK, the impact is primarily through global market pricing. Disruption to Gulf energy supplies can increase competition for alternative LNG and influence wholesale gas and electricity prices. With Qatar also extending force majeure on some LNG deliveries, the availability of alternative supply will be an important factor to watch this winter.
A winter without Qatari LNG
One of the key factors to watch this winter is the availability of Qatari LNG.
Qatar is an important global LNG supplier, and disruption to its exports can have implications beyond the markets it supplies directly. If Qatari LNG is unavailable, European buyers may need to source additional volumes from other producers, increasing competition for available cargoes.
This raises an important question for the months ahead: how much alternative LNG supply is available, and what happens if European and Asian buyers need additional volumes at the same time?
The answer will depend on a range of factors, including global LNG production, shipping availability, demand and the ability of suppliers to redirect cargoes between markets.
Would 75% European gas storage be enough?
European gas storage levels will be another important factor as we move into winter.
Storage provides a buffer that can help meet demand during periods when consumption increases or supply is disrupted. However, the percentage of gas held in storage at the beginning of winter is only part of the picture.
How quickly storage is drawn down will depend on factors including:
- Temperatures and heating demand
- Industrial gas consumption
- Pipeline imports
- LNG availability
- Renewable generation
- The duration of colder periods
- Demand from other global markets
A mild winter could reduce pressure on storage, while a prolonged cold spell could see reserves drawn down more quickly.
This means the question isn’t simply whether European storage reaches a particular percentage. It’s how storage levels evolve once winter demand begins.
Competition with Asia for US LNG
Europe isn’t the only region looking to LNG markets to meet winter demand.
Asian markets can also require significant LNG volumes, particularly during periods of colder weather or increased energy demand. This creates the potential for European and Asian buyers to compete for flexible US LNG cargoes.
For the UK and wider European market, this is important because LNG cargoes can be directed towards the markets where demand and prices provide the strongest incentive.
If European demand increases at the same time as Asian demand, competition for available LNG could place additional pressure on global gas prices.
This is one reason why developments outside the UK can have a direct impact on the energy costs faced by British businesses.
Could the weather influence energy prices?
Weather is always an important consideration for energy markets because it influences both demand and renewable generation.
The Met Office is currently monitoring the influence of a developing El Niño event. El Niño is a natural climate pattern involving changes in sea surface temperatures in the tropical Pacific, which can influence atmospheric circulation and weather patterns around the world.
The Met Office has highlighted the potential for El Niño to influence UK weather during the coming months, while also stressing that it is only one of several factors that determine the UK’s weather.
For energy users, the important question is what these potential weather patterns could mean for demand and generation.
During winter, colder conditions can increase demand for heating, placing additional pressure on gas supplies. At the same time, wind conditions can have a significant influence on renewable electricity generation.
This means that the weather could affect both sides of the energy market: how much energy businesses and households need, and how much electricity can be generated from renewable sources.
What could winter 2026 mean for UK power prices?
Gas is an important influence on UK electricity prices, but it is not the only factor businesses need to watch.
The UK’s power market is influenced by a combination of factors, including:
- Wholesale gas prices
- Wind and solar generation
- Nuclear availability
- Electricity demand
- Interconnector flows
- Power station availability
- Wider European electricity market conditions
Periods of strong renewable generation can reduce reliance on other forms of generation, while periods of low wind generation can increase the need for alternative sources of electricity.
This means the outlook for UK power prices will depend on how these factors interact throughout the winter.
Three potential winter scenarios
While it is too early to predict exactly what will happen, considering different scenarios can help businesses understand the potential market risks.
1. Mild and windy
Lower heating demand combined with strong renewable generation could reduce pressure on gas and electricity markets.
2. Colder but well supplied
Higher energy demand could be offset by sufficient gas storage, LNG availability and generation capacity, helping the market meet increased demand.
3. Cold weather and disrupted supply
A colder winter combined with limited LNG availability and increased competition from Asian buyers could place greater pressure on gas markets and potentially feed through into electricity prices.
These are illustrative scenarios rather than forecasts, but they highlight why businesses should consider a range of market conditions when reviewing their energy strategy.
What should businesses be watching this winter?
For businesses managing significant energy consumption, there are several indicators worth monitoring as we move towards winter:
- European gas storage: Not just how much gas is in storage, but how quickly reserves are being used.
- LNG flows: Particularly developments affecting Qatari supply, US LNG and the availability of alternative cargoes.
- Asian demand: Increased demand from Asian markets could intensify competition for flexible LNG supply.
- Weather forecasts: As winter approaches, changing forecasts can provide greater insight into potential demand and renewable generation.
- UK power market fundamentals: Wind generation, gas-fired generation, nuclear availability and interconnector flows could all influence electricity prices.
The challenge for businesses isn’t necessarily predicting which individual factor will have the biggest impact. It’s understanding how these factors interact and what changing market conditions could mean for energy procurement and risk management.
What could businesses expect this winter?
With global LNG supply, European storage, Asian demand, geopolitical developments and UK power generation all influencing the market, there are several variables to watch as winter approaches.
So, what could a winter without Qatari LNG mean for European markets? Would 75% European storage provide enough of a buffer? And how could competition with Asia for US LNG influence prices?
These are some of the questions Ben Sherbrooke, Director of Trading at Consultiv Utilities, will explore in our upcoming Winter 2026 Energy Market Outlook webinar.
The session will also look at the outlook for the UK power market and the key factors businesses should be monitoring as we move through the winter.
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