On Monday, both gas and carbon markets posted massive gains fueled by geopolitical tensions and unfavorable weather conditions. The EUA Dec’25 contracts traded as high as €77,23 before closing at €76,92, a level last seen in early June 2024. Meanwhile, TTF front month gas ended the day at €48.261/MWh, posting a massive daily gain of 7,23%, the biggest since April 2023.

Both markets reacted to the US sanctions targeting the Russian oil industry as well as claims made by Kremlin officials that “Ukraine tried to attack part of the infrastructure of the TurkStream gas pipeline, through which Russian gas flows to Turkey and Europe”, as reported by Reuters.

In addition to the geopolitical tensions, weather reports fueled the dramatic increase in prices. According to Bloomberg, “freezing temperatures across western Europe will drive up heating demand this week, with the weather outlook turning colder than previous forecasts.”

As if it was not enough, wind forecasts for central-western Europe published ahead of the weekend were revised downwards on Monday.  According to the Bloomberg model, wind generation in Germany is expected to drop this Wednesday to  “as low as 2,200 megawatts, down from 24,000 megawatts on Tuesday.” 

Tuesday morning, carbon prices eased slightly, responding to falling gas and oil prices. The EUAs most likely will continue to follow energy related assets as it “will definitely remain in the hands of nervous oil and gas markets who are under the heel of geopolitical headlines,” as stated by Yan Qin, carbon analyst at ClearBlue Markets.