Market Report August 2025

Despite the markets falling in the short term, gas and power prices have begun to rise this month due to several factors. Short term weather forecasts point to another heatwave across Northwestern Europe, accompanied by low wind generation. This accompanied by a sharp rebound in the US dollar against the euro and sterling, has pushed up the price of LNG (Liquified Natural Gas), coal, and oil products. But potentially the biggest risk to the markets is the threat of increased US tariffs and penalties on Russian energy buyers resurfacing. With the US President stating Russia had “10 or 12 days” to agree to a ceasefire in Ukraine or face tariffs, along with its oil buyers. It remains to be seen whether this rhetoric will impact Russian oil exports and, crucially for European gas prices, whether it will affect Russian pipeline gas or LNG flows. Assuming any disruption proves short-lived, prices should decrease in the coming weeks, as the underlying fundamentals remain favourable due to rising oil output and the continued increase in global LNG production.

The Government has approved the Sizewell C nuclear power plant, also unlocking financing for British nuclear energy through the Regulated Asset Base (RAB) model, which combines public funding with private capital. Sizewell C is expected to be delivered at an estimated cost of £38 billion. This figure is far higher than initially thought and will already add £1 a month to all household energy bills for up to a decade with expected increases to businesses, similar to the contracts for difference (Cfd) charges already being passed onto some larger business customers. There will undoubtedly be further costs to businesses as the project evolves…

In other news

UK private sector growth slowed in July, with the Composite PMI dropping to 51 from 52, as firms faced declining orders and rising costs linked to last year’s tax hikes.

Earth Overshoot Day 2025 fell on July 24th, the earliest it has ever been – July 24th marked Earth Overshoot Day this year, the date when humanity’s demand for ecological resources exceeds what the planet can naturally replenish in that year. This is the earliest in the year it has ever been. This means that humanity is currently consuming natural resources 1.8 times faster than the Earths ecosystems can regenerate and this unsustainable overshoot comes with significant global consequences, including extreme weather events.

The UK’s BP plc has announced their largest hydrocarbon discovery since the Shah Deniz gasfield in Azerbaijan back in 1999. The Bumerangue prospect, situated approximately 250 miles offshore of Rio de Janeiro, lies within Brazil’s Santos Basin. The reservoir, which spans 300 square km is now expected to provide commercial quantities of both oil and gas, though further tests are required to determine the fields qualities and the size of the discovery.

Small energy suppliers lose more ground as big six tighten market grip – The domestic energy market share held by small and medium-sized suppliers (SaMS) in Great Britain has fallen to a new low of 8.6% in the second quarter of 2025. The country’s six largest energy providers – British Gas, E.ON Next, EDF, Octopus Energy, OVO and Scottish Power now control an incredible 91.3% of the domestic energy market.