On Friday, the European carbon market rose alongside gas and oil, with the EUA Dec’25 contract briefly trading at €76.75, the highest level since mid-February. However, carbon failed to hold on to early gains and closed the session at €75.94, ending the week with a 3.3% gain.

The main focus on Friday was the escalation of Iranian-Israeli tensions, “raising fears of a wider war in a region that is key to global energy supplies,” according to Bloomberg. Brent oil’s front-month contract rose more than 7%, while the TTF front-month gas contract surged by 4.75%.

“The market fears that the situation could end up affecting LNG supply to Europe, which could be the case if Iran, as a result of the escalating conflict, ends up closing the Strait of Hormuz,” writes Mind Energy this morning.

Blocking the Strait of Hormuz—a strategic waterway for LNG and oil exports from Gulf states—“would be a disaster for Europe,” according to a former French intelligence official quoted by Euronews.

On Monday morning, European carbon prices appeared disconnected from gas markets. The EUA Dec’25 contract traded mostly sideways, while the TTF front-month price continued its bullish run, climbing as high as €39.00 in early trading—the highest since April 8. We expect the primary market focus this week to remain on the Middle East conflict.