The European carbon market advanced for a third consecutive week, with Dec’26 EUA futures settling at €76.92 on Friday. The contract gained 2.66% on the day, its strongest daily increase in two weeks, and closed 1.74% above the previous Friday’s settlement.

Trading activity remained subdued, with only 77.5 million allowances traded, roughly half the volume recorded during the last week of March. “We will see whether this reflects the early onset of seasonal summer inactivity or the calm before the storm,” analysts at BBVA warned.

On Monday morning, there were no major fluctuations on the European carbon market, with carbon allowances trading around Friday’s close. Thinner liquidity and reduced trading volumes are also expected due to the Whit Monday holiday observed across several European countries.

The situation is quite different on the European gas market, with the TTF front-month contract falling as much as 5.1% in early trading amid signs that the US and Iran may be moving closer to ending the conflict. However, “crucial details of a framework agreement are still under negotiation,” according to CNN, citing US officials, who added that “it could take a few more days to finalize.”

The decline in gas prices comes at a sensitive time for Europe, as the region faces a critical summer for energy security. EU gas inventories are hovering between 36% and 38% full — significantly below the seasonal norm of around 50%. Reaching the mandatory 90% target before winter will require massive and costly injections, further straining the market amid global supply volatility.

However, carbon prices remain relatively muted despite the sharp moves in European gas prices because the market views the US-Iran negotiations primarily as a short-term gas supply and geopolitical story rather than a structural shift in EUA fundamentals.

“Should macro sentiment improve, trade tensions ease, and geopolitical risks moderate, we believe EUAs could transition from the current stabilisation regime toward an EUR 80–90 trading environment,” BBVA analysts said.

Still, the economic outlook remains one of the most important drivers of carbon price forecasts, as the EU carbon market is closely tied to industrial activity and overall economic growth. European Central Bank President Christine Lagarde warned on Friday that even if the conflict in the Middle East were to end now, “lagging effects” would keep goods prices elevated. “And it’s probably a fact that price levels will be higher at the end of this crisis, when we see the end of the crisis,” Lagarde added.