The upward trend in the European carbon market that began on Thursday extended into Friday, with EUA Dec’25 briefly rising above €78 for the first time since mid-February before settling at €77.46, marking a daily gain of 3.29%.

The week ultimately closed with a sharp 6.34% increase, the strongest weekly gain since early November 2024, and the fourth consecutive week of rises—suggesting that “speculative traders are on the market building up new long positions again,” according to Mind Energy.

The rebound in carbon prices was most likely driven by increased optimism that progress in talks between U.S. and Iranian negotiators could help end the conflict. “In line with the ceasefire in Lebanon, the passage for all commercial vessels through the Strait of Hormuz is declared completely open for the remaining period of the ceasefire,” Iranian Foreign Minister Abbas Araghchi said in a post on X on Friday.

Following the announcement from the Iranian official, both oil and gas prices dropped significantly. Brent crude closed the day with a 9% decline, while TTF front-month gas fell by 8.6% to its lowest level since the U.S.-Israeli conflict with Iran began. 

By Monday morning, as the peace deal once again unraveled, the optimism that had supported the carbon market in Friday’s trading. quickly faded. Carbon prices traded 2% lower following Iran’s renewed closure of the Strait of Hormuz, while TTF gas rose by as much as 11%.

Despite this shift in sentiment, the downside remained relatively contained, with EUAs giving back only about half of Friday’s gains rather than experiencing a sharper correction—a sign that market participants, despite the setbacks, continue to hope for a resolution.