2025 In Review
Published date: 13/01/2026
Read time: 4 minutes
Welcome to our 2025 End of Year Review, where we reflect on a year that has been nothing short of eventful for the UK energy market. From seismic geopolitical shifts to regulatory shake-ups and wild price swings, 2025 has kept us on our toes. Join Jay Luka, our Customer Hedging Analyst as he unravels the standout moments, decoding the drivers behind market volatility, and offers you his expert perspective on what truly moved the needle in 2025.
The Energy Market in 2025:
The year began with a sense of optimism, shaped by the high-profile Russia–Ukraine transit negotiations. However, when no agreement was reached, hopes for continued Russian gas supplies to Europe via Ukraine quickly faded, raising concerns over a looming supply crunch. January also ushered in a new US administration, which signalled a fundamental shift in energy policy, LNG export authorisations returned to the agenda, suggesting a realignment of global energy trade routes.
Throughout the first quarter, it was observed that fund managers drove heightened volatility and price surges with their aggressive positions. The tension only escalated in Q2, when the US introduced sweeping tariffs, sparking global market jitters and a fresh round of trade negotiations. For a brief period, bearish sentiment prevailed, until the unexpected outbreak of a 12-day conflict between Iran and Israel, which injected renewed uncertainty and saw bullish momentum briefly regain control.
The summer months offered a welcome respite. Norwegian maintenance went ahead as planned, allowing the market to stabilise and prices to settle. But with Q3 on the horizon, the focus shifted to a much-anticipated summit between President Trump and President Putin, with speculation swirling about a possible breakthrough in the Russia–Ukraine standoff.
Q4 brought its own twists. A US-brokered ceasefire in the Middle East and a long-awaited US–China trade truce helped ease global tensions. Nevertheless, market participants were quick to notice Henry Hub prices in the US hitting a three-year high, and the unexpected shelving of the Lake Charles LNG project raised new questions about the future trajectory of LNG investments.
Q1 2025: A Frosty Start and Policy Shifts
The year opened with Europe’s gas supply hanging in the balance. The collapse of the Russia–Ukraine transit deal sharply curtailed daily deliveries and sent shockwaves through the European gas market. By 20th January, the incoming US administration reversed course on LNG export permits, an announcement that promised accelerated global supply and investment.
Aggressive moves by fund managers translated into sharp price action, with winter delivering volatile price movements akin to the energy crisis. A colder-than-average quarter, combined with reduced Russian imports, left European gas storage worryingly low, at just 33% full by the end of March. This scenario set the stage for a hectic summer as the market prepared to replenish depleted stocks.
Q2 2025: Tariffs, Tension, and Turmoil
On 2nd April, “Liberation Day”, declared by President Trump, reverberated through markets. The introduction of sweeping tariffs saw Brent crude prices plummet from around $75 to $64 per barrel, as markets braced for slower economic growth and weaker demand.
Volatility reached new heights in June with the outbreak of a 12-day war between Iran and Israel. The threat to the Strait of Hormuz, a key global corridor for LNG and oil, intensified market anxiety. Thankfully, any closure of the Strain did not materialise, and a US brokered ceasefire on 24th June helped restore stability.
Meanwhile, Europe revised its gas storage policies, allowing flexibility to reach the 90% target any time between 1st October and 1st December, with a margin for deviation during tough market conditions. This regulatory adjustment was designed to smooth summer price spikes and give buyers greater flexibility.
Q3 2025: Weather Woes and Geopolitical Games
The third quarter began under the shadow of extreme summer temperatures, pushing power prices higher. Constraints on nuclear generation added to the pressure, with EDF cautioning about potential shutdowns at the Bugey plant on the Rhône. The arrival of cooler weather brought relief, easing demand and pulling prices back from their highs.
French nuclear output climbed to a seven-year high, wind generation picked up, and day-ahead power prices softened. However, sudden dips in wind output underscored our growing reliance on renewables. Gas supply chains remained strong, buoyed by record LNG imports, healthy storage, and robust Norwegian flows. But persistent supply risks and maintenance issues lingered, as did the drive for Europe to end its reliance on Russian gas by 2027.
The much-anticipated summit between Presidents Trump and Putin in Alaska ultimately failed to produce progress on peace, although later discussions hinted at cautious optimism for future negotiations. During the latter stages of Q3, Russian warplanes violated NATO airspace on several occasions with Poland, Romania and Estonia reporting Russian fighter jets in the territory. These incidents highlight the security concerns faced by Europe as a collective from Russia.
Q4 2025: Ceasefires, Trade Truces, and Market Highs
The final quarter opened with a US-mediated ceasefire between Israel and Hamas. While the ceasefire was fragile, the situation remained tense, and long-term stability in the region remained out of reach.
Elsewhere, a formal US–China trade truce in late October saw tariffs reduced to a baseline 10%, offering reassurance to global supply chains. In the US, colder weather sent Henry Hub gas prices to a three-year high of $5.06/MMBtu, with surging heating demand and record LNG exports, despite the shelving of the Lake Charles project amid rising costs and concerns over a potential supply glut. Carbon prices also rallied into year-end, driven by reduced allocations and bullish hedge fund activity.
Final Thoughts: Lessons from a Tumultuous Year
To sum up, 2025 exemplified just how unpredictable energy markets can be, with a seemingly perpetual backdrop of geopolitics shaping the market from Liberation Day to the conflicts in the Middle East and Russia-Ukraine still ongoing causing volatility in the sector. We saw regulatory changes throughout the year with the storage flexibility, and the EU Commissions and Parliaments plan to phase out all Russian gas by 2027. The situation in Eastern Europe is fragile, and developments could impact sentiment in the market as we have seen in 2025. We saw energy infrastructure in Ukraine targeted on a large scale, drone strikes exchanged with oil infrastructure impacted in both countries and NATO airspace violated on various occasions highlighting security concerns. We will take a more detailed look into this in our outlook for 2026. In terms of price across the year, we saw prices peak in the first quarter as shown in the graphs, largely attributed to the positioning of funds in the gas market as mentioned previously. As 2025 progressed prices steadied after the volatility in Q2 and remained softer for the second half of the year. As we enter 2026, keep an eye out for further content from us where we explore the outlook for 2026 in more detail.
If there’s one lesson I take from 2025 though, it’s the importance of staying agile and well-informed. The wild price swings, peaking in the first quarter and settling later in the year, highlight why expert insight and strategic decision-making are more crucial than ever in navigating this constantly evolving landscape.
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