Op-ed by Conor Klaptayj, strategic risk manager, Consultus International.
Markets were dominated by extreme geopolitical volatility in early April as tensions between the United States, Iran and Israel repeatedly escalated and de-escalated around control of the Strait of Hormuz, driving sharp swings in energy prices and risk sentiment.
Early in the month, markets weakened as hostilities persisted and Iran rejected multiple US-backed ceasefire proposals, conditioning any settlement on sanctions relief, reconstruction funding, and sovereign control over transit protocols in the Strait. The situation deteriorated further after Iranian authorities halted Qatari liquified natural gas (LNG) carriers attempting to transit Hormuz, highlighting immediate supply risks.
President Trump’s increasingly aggressive rhetoric and deadline-driven ultimatums added to uncertainty, while a diluted UN Security Council resolution failed to reassure markets. Midweek, risk premiums surged as the US issued an ultimatum for Iran to reopen the Strait, threatening strikes on critical infrastructure.
Structural tightness in global gas and LNG markets amplified the reaction: European storage levels remain near 28%, US LNG utilisation is near capacity, Australian flexibility is constrained by the extended Wheatstone outage, and Asia continues to outbid Europe for marginal cargoes.
Despite soft spring demand, markets increasingly questioned whether summer supply risks were being underpriced.
Short-term relief
A sharp reversal followed President Trump’s announcement of a two‑week conditional ceasefire, explicitly tied to reopening Hormuz. This triggered one of the largest single‑day unwindings of geopolitical risk premium on record, with crude prices falling 13-16%. However, the relief proved fragile. Iranian strikes on Saudi energy infrastructure, continued restrictions on shipping permits, and conflicting statements from all parties quickly undermined confidence in the ceasefire’s durability.
Vessel traffic through Hormuz remained below 10% of normal volumes, leaving hundreds of oil and LNG carriers stranded inside the Gulf. Markets have also gained value as peace talks collapsed. Oil rebounded above $100/bbl following the announcement of a US blockade on Iranian ports and the threat of counter‑blockades.
Supply chain concerns
Although US naval mine‑clearing activity suggested limited progress toward reopening shipping lanes, uncertainty around regional escalation remained elevated. Forward curves flattened, further weakening storage economics and liquidity across European hubs.
From a UK gas perspective, fundamentals are largely overshadowed by geopolitics. Unseasonably warm weather kept local distribution zone (LDZ) demand subdued for much of early April, leaving the system generally long and enabling injections, despite fluctuating Norwegian imports.
Toward the end of the period, falling temperatures lifted LDZ demand and tightened balances temporarily, but rising wind generation is expected to restore injections. Norwegian exports peaked at record April levels early in the week before easing as Troll maintenance (~15 mcm/d) became the primary outage.
In an era of extreme geopolitical risk, a proactive energy strategy is your best defence.
To learn more, visit www.consultus.com.
