The European carbon market has maintained a gradual but steady upward trend since the beginning of September, with buying momentum strengthening over recent sessions. Prices have recorded gains in every trading session so far this month except one.

In yesterday’s session, EUA Dec’26 prices briefly climbed to €86.00, marking their highest level since 23 July. However, the upward momentum once again faded as the session progressed, with prices retreating from the intraday high before settling at €85.42.

Market attention remains firmly focused on the broader energy complex, particularly the strong rally in European natural gas prices, which have gained more than 8% since the beginning of September alone.

The TTF front-month contract closed yesterday’s session at €75.841/MWh, its highest level in more than three and a half years, as escalating tensions between the US and Iran continued to fuel concerns over potential disruptions to global energy supplies.

Julien Mathonniere of Energy Intelligence cautioned that prolonged disruption to flows through the Strait of Hormuz could place significant additional upward pressure on European gas prices. “If disruptions in the Strait of Hormuz persist through the winter, a price range of 100 to 150 euros per megawatt-hour is plausible,” warns Julien Mathonniere at Energy Intelligence, quoted by AFP.

Elevated gas prices could continue to provide support for carbon, reinforcing the close relationship between the two markets. However, attention is increasingly turning towards the political process surrounding potential EU ETS reforms, adding another layer of uncertainty to the market outlook.

That uncertainty may partly explain the relatively subdued trading activity accompanying the recent rally. Despite the steady rise in prices, volumes remain weak, suggesting that speculative participants are maintaining a cautious stance while awaiting greater clarity on the direction and potential implications of the EU ETS review.

For now, stronger energy markets appear to be providing the main directional support for EUAs, while subdued participation and continued policy uncertainty may limit the pace of further gains.