March 2025 Energy Market Review
April 3, 2025
GLEG UK Energy Market Update…
April 7, 2025
Market Reactions
President Trump has announced a 10%+ tariff on a variety of imports to the US (with some imports significantly higher), this has triggered an immediate reaction for market participants worldwide, increasing uncertainty and volatility.
The Risks
In a reaction to the announcements stock markets have reflected reactive pressure, including Asian economies. US businesses may require to adopt US manufacturing, increasing the costs, this could result in a reduced demand as costs are passed through to consumers. Europe faces additional challenges, as LNG continues to be a foundational fuel source, which could climb as a result of Asian competition. Tariffs may also be introduced on the US in retaliation to the announcement.
Impacts on European Gas Storage
European gas storage levels currently sit at 33%, below the five-year average. This raises concerns about summer refill strategies. LNG availability is a concern with competitive global markets, Europe may struggle to secure necessary cargoes at favourable prices if tariffs are increased, however, the White House clarified that oil, gas, and refined products would be exempt from the tariffs, improving some confidence around energy supply.
Fear or Fact?
As markets digest the impact of tariffs, an initial overreaction is possible. Traders may push prices higher in anticipation to supply pressures, but fundamental changes will likely follow. Alternative energy sources such as increased renewables and nuclear generation in France could ease the pressure on gas prices. The key area of uncertainty lies with Russian Gas supplies. If these return to form, supply abundance could significantly shift market dynamics and sentiment.
With these geopolitical shifts unfolding, volatility in energy markets is set to increase. The long-term effects of tariffs remain unclear, but they introduce a layer of uncertainty that businesses must navigate carefully.