Author: Fiona Craig

European and British wholesale natural gas prices declined on Monday as reports of alternative energy shipping routes eased concerns about supply disruptions in the Persian Gulf.

The benchmark Dutch front-month Title Transfer Facility (TTF) contract fell 2.5% to €77.55 per megawatt-hour (MWh), extending its decline from the previous week.

In Britain, the equivalent National Balancing Point (NBP) wholesale gas contract dropped 2.91% to 192.36 pence per therm, approaching its lowest levels in several weeks.

The declines followed reports that liquefied natural gas (LNG) tankers and crude oil carriers were increasingly using alternative routes to transport energy supplies from the Gulf.

ECB Identifies Faster Impact on Consumer Inflation

Despite Monday’s decline in wholesale prices, the European Central Bank (ECB) warned that changes in gas prices could now affect eurozone consumer inflation more quickly than in previous years.

In an Economic Bulletin published on Monday, the ECB reported that wholesale gas price movements are reflected in consumer gas inflation within one to three months in more than half of eurozone countries.

The proportion of countries where transmission takes between 13 and 24 months has fallen from approximately 40% in 2022 to around 5%.

The ECB attributed the faster transmission to changes in European energy markets, including greater price flexibility and shorter-term contracts introduced following the energy crisis.

However, the central bank found that electricity prices have become less sensitive to movements in natural gas prices.

The expansion of renewable electricity generation has reduced the role of gas in determining electricity production costs, limiting the impact of wholesale gas price fluctuations on electricity inflation.

Inflation and Interest Rate Outlook

European wholesale gas prices remain more than 140% above their levels a year earlier, reflecting the effects of the conflict involving Iran and continuing supply disruptions.

Eurozone headline inflation is above 3%, exceeding the ECB’s 2% target. Some economists expect inflation to approach 4% by the end of the year.

The findings have added to market attention surrounding the ECB’s interest rate outlook following two rate increases in recent months.

Investors are assessing whether further monetary tightening may be required to address inflationary pressures, although no additional rate decision has been announced.

Alternative Supply Routes Ease Immediate Concerns

Energy traders have reported an increase in LNG and crude oil shipments using alternative routes around Persian Gulf transport bottlenecks.

These arrangements include greater use of overland pipeline capacity, redirected maritime traffic and expanded ship-to-ship transfers off the coast of Oman.

The alternative routes have reduced some immediate concerns about a complete interruption of transit through the Strait of Hormuz.

Together with declining crude oil futures, the developments contributed to lower European wholesale gas prices on Monday.

Nevertheless, regional supply conditions remain uncertain, and the ECB’s analysis indicates that future wholesale gas price increases could reach consumers more rapidly than in the past.

Europe is expected to face a substantial jet fuel supply deficit in the fourth quarter of 2026, despite increasing imports from alternative suppliers, including South Korea, as disruptions to Middle Eastern supplies continue to affect the market.

According to consultancy Energy Aspects, Europe’s jet fuel deficit is forecast to reach 510,000 barrels per day (bpd) during the fourth quarter. The United States and Asia-Pacific are expected to record surpluses of 18,000 bpd and 419,000 bpd, respectively.

A similar supply imbalance is expected during the third quarter.

Europe has increased jet fuel imports from Nigeria, the United States and Canada since the outbreak of the Iran conflict more than six months ago. The disruption to Middle Eastern supplies has affected approximately half of Europe’s jet fuel imports.

The continent remains exposed to further supply interruptions as tensions in the region continue.

South Korean Exports to Europe Increase

South Korea has emerged as a significant additional supplier, with shipments to Europe reaching their highest level in almost four years.

Data from commodities intelligence firm Kpler showed that European imports of South Korean jet fuel averaged 129,000 bpd so far in September, the highest level since October 2022.

Data from LSEG indicated similar shipment volumes.

James Noel-Beswick, head of commodities at Sparta Commodities, expects European jet fuel imports to continue as the region faces a persistent supply shortfall.

Jet fuel belongs to the middle distillates category, alongside diesel and gas oil. European diesel prices reached a record high during the week, exceeding levels in Asian markets.

According to Noel-Beswick, the widening price difference between European and Asian fuel benchmarks has made shipments to Europe more commercially attractive.

European Inventories Fall as Asian Refinery Output Rises

Europe’s increased reliance on imports coincides with declining inventories.

Independently held stocks at the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell to their lowest level in seven years during the week ending 10 September.

Asian suppliers typically increase jet fuel shipments to Europe when regional price differences make exports commercially viable.

Kpler data showed that average monthly Asian jet fuel exports to Europe totalled 1.5 million barrels last year.

South Korea has increased its fuel production, supported by higher refinery processing rates.

Government figures showed that South Korean jet fuel output reached almost 13.89 million barrels in July, its highest level in seven years. Exports also climbed to a three-and-a-half-year high.

Provisional data indicated that the country’s crude oil refining throughput reached 2.7 million bpd in July, an increase of 16% from June.

Traders expect August refining activity to exceed July’s level, although the final figures were not provided.

The additional supply from South Korea is helping Europe diversify its jet fuel imports, but the projected fourth-quarter deficit indicates that the region remains dependent on continued shipments from international suppliers.

Eurozone government bond yields fell on Monday as declining oil prices and political developments in Germany influenced debt markets ahead of scheduled remarks from senior European Central Bank officials.

Germany’s two-year Schatz yield edged down to 3.232%, while the benchmark 10-year Bund yield declined to 3.479%, retreating from the multi-month highs reached earlier in September.

Longer-dated German government bonds also advanced, with the 30-year yield falling for a fourth consecutive session to 3.817%, its lowest level in nearly two weeks.

Bond yields move inversely to prices, meaning the declines reflected rising prices for German government debt.

Lower Oil Prices Ease Inflation Concerns

Crude oil prices retreated during Monday’s session following reports that larger-than-expected volumes of Persian Gulf oil were reaching international markets through overland pipelines and alternative shipping routes.

The developments reduced some concerns about disruptions to energy supplies in the Middle East.

Lower crude prices also contributed to an easing in near-term eurozone inflation expectations, supporting demand for longer-dated government bonds following several weeks of selling pressure.

However, the outlook for energy prices remains uncertain, with developments in the region continuing to influence inflation expectations and bond markets.

German Political Developments in Focus

Investors also assessed the outcome of a German state election in which Chancellor Friedrich Merz’s conservative party recorded its weakest performance since 1949.

The result raised questions among market participants about the governing coalition’s ability to implement economic reforms and manage fiscal policy.

The source analysis attributed part of Monday’s demand for German government bonds to investors seeking relatively secure assets amid the political uncertainty.

The resulting buying interest provided additional support for Bund prices, contributing to the decline in yields.

ECB Interest Rate Outlook Remains Central

Attention was also focused on scheduled public appearances by ECB President Christine Lagarde and Executive Board member Piero Cipollone later in the day.

Investors were looking for indications of the central bank’s next policy steps following its decision two weeks earlier to raise interest rates to 2.50%.

The central question for bond markets is whether policymakers consider the current level of interest rates sufficient to address inflationary pressures associated with higher energy costs or believe further increases may be necessary.

According to the source report, interest rate futures were pricing in another ECB rate increase as early as next month.

The upcoming remarks from Lagarde and Cipollone could therefore influence market expectations for the timing of any further policy changes, although no additional rate decision has been announced.

Rising natural gas prices could affect eurozone consumer inflation more rapidly than in the past, although their impact on electricity prices may be reduced by the growing contribution of renewable energy, according to a European Central Bank (ECB) Economic Bulletin.

European wholesale natural gas prices have increased by more than 140% compared with a year earlier. The conflict involving Iran has constrained global supplies, while low European gas inventories have increased the risk of further price rises.

The ECB said changes in European gas markets following Russia’s invasion of Ukraine in 2022 have accelerated the transmission of wholesale price movements to household energy bills.

Greater price flexibility and increased use of shorter-term contracts mean retail gas prices can respond more quickly to changes in wholesale markets.

Gas Price Changes Reach Consumers Faster

A survey conducted by European Union central banks found that wholesale gas price changes are now reflected in consumer gas inflation within one to three months in more than half of eurozone countries.

In approximately one-tenth of countries, the transmission takes four to six months. In around one-third, the process takes between seven and 12 months.

The proportion of countries reporting a slower transmission period of 13 to 24 months has declined substantially compared with 2022.

The ECB stated: “Specifically, the share of countries reporting a slow transfer within a period of 13 to 24 months has fallen from around 40% to around 5% by 2022,”

The findings indicate that wholesale gas price increases could influence household energy costs and headline inflation sooner than during previous energy market disruptions.

Implications for Inflation and Interest Rates

The ECB’s assessment comes as eurozone inflation is already above 3%, exceeding the central bank’s 2% target.

Some economists expect inflation to reach 4% by the end of the year, potentially adding pressure on the ECB to consider further interest rate increases following its actions over the preceding two months.

However, the report distinguishes between the impact of higher gas prices on household gas bills and their effect on electricity costs.

The expansion of renewable electricity generation has reduced the role of natural gas in determining electricity production costs, limiting the extent to which wholesale gas price movements feed through to electricity inflation.

“These developments suggest that changes in wholesale gas prices may be reflected in HICP gas inflation more rapidly than in the past, but to a lesser extent in HICP electricity inflation,” the ECB said, referring to the Harmonised Index of Consumer Prices.

The analysis suggests that the inflationary consequences of the latest gas price increases will depend partly on national retail pricing arrangements and the changing composition of Europe’s electricity supply.

JD Sports (LSE:JD) has announced its entry into the Mexican market through a long-term franchise partnership with fashion retailer Grupo Axo.

Under the agreement, Grupo Axo will operate JD-branded stores and e-commerce activities in Mexico using the British sportswear retailer’s brand and intellectual property.

The partnership will incorporate JD Sports’ own-brand and exclusive product ranges across footwear, clothing and accessories.

Grupo Axo will operate more than 140 JD premises in Mexico through its existing sneaker retail network. The partners also plan to expand the store portfolio at selected locations over time.

The agreement establishes a franchise-based operating structure for JD Sports in Mexico, with Grupo Axo responsible for local retail and online operations.

JD Sports Chief Executive Régis Schultz commented on the company’s plans for the market.

“We see a significant opportunity to lead the category in Mexico,” said CEO Régis Schultz.

The partnership represents an expansion of JD Sports’ international retail operations through a local franchise partner. The company has not disclosed financial terms, investment commitments or a timetable for additional store openings.

Elixirr International (LSE:ELIX) reported a 25% increase in revenue to £89.0 million for the first half of 2026, supported by growth in artificial intelligence-related services and its broader consulting operations.

The consultancy said AI-related revenue rose 185% to £8.1 million from £2.8 million in the corresponding period last year. Organic revenue growth at constant currency was 5%.

Adjusted EBITDA increased 29% to £27.6 million, while the adjusted EBITDA margin expanded to 31.0% from 30.0% a year earlier.

Adjusted profit before tax rose 25% to £25.1 million, and adjusted diluted earnings per share increased 18% to 34.2 pence.

The company reported an increase in revenue from its existing client relationships, with 35 clients generating more than £1 million each during the period, compared with 31 a year earlier.

Cross-selling revenue increased 27% to £19 million, reflecting additional services provided to existing customers.

Chief Executive Stephen Newton said businesses are increasingly moving from evaluating the potential applications of artificial intelligence towards implementing the technology within their operations.

He also highlighted the company’s investment in consulting, AI, data and technology capabilities over the past six years.

“The scale of the opportunity ahead is significant. Industry research estimates that agentic AI alone could create up to $200 billion of new demand for technology services over the next five years. We have spent the last six years deliberately building our consulting, AI, data and technology capabilities to benefit from this shift,” he said.

The industry demand estimate cited by Newton relates specifically to agentic AI technology services and represents a forecast rather than contracted business for Elixirr.

The company continues to develop its AI-related consulting and technology services alongside its existing advisory operations.

Looking ahead, Elixirr expects total adjusted EBITDA for FY 26 will be in line with market expectations and revenue will be broadly in line.

The outlook follows first-half growth across revenue, adjusted earnings and AI-related services, with the company maintaining its existing full-year financial expectations.