The global energy market has always been cyclical. Prices rise and fall, supply tightens and loosens, and procurement teams adjust accordingly. But what we are seeing now is not a normal cycle, it is a prolonged period of extreme volatility, driven by geopolitical instability, structural market shifts and ongoing uncertainty in global supply chains.
For organisations responsible for managing energy procurement, this volatility presents a fundamental challenge: how do you budget, plan and deliver value when prices can swing dramatically in a matter of weeks and even days?
In this environment, traditional fixed or fully flexible strategies are increasingly exposed. Instead, energy basket strategies are emerging as a rather resilient and practical approach to energy management for organisations.
A Market Defined by Volatility, Not Stability
Over the past five years, the global energy landscape has undergone profound disruption. The initial shock came during the 2021–2023 energy crisis, when wholesale gas prices surged to record highs, driving UK energy bills up by more than 50% in a single price cap adjustment. (House of Commons Library)
Although prices have eased from their peak, they remain significantly elevated – around 35% higher than pre-crisis levels, and, crucially, far more volatile. (House of Commons Library).
That volatility has only intensified in 2026. The cost of gas over the next 12 months is up around 50% from 3 months ago.
Recent geopolitical tensions in the Middle East have disrupted critical supply routes such as the Strait of Hormuz, sending oil prices towards $120 per barrel (up from $69 in early Feb) and triggering sharp swings in global markets. (The Times)
At the same time, analysts warn that supply disruptions could remove millions of barrels per day from the market, while demand destruction is already occurring in some regions due to high prices. (MarketWatch)
Even temporary ceasefires can cause dramatic price corrections, illustrating just how reactive and unstable the market has become. (The Guardian)
For energy buyers, this creates a paradox: prices may be lower today than at crisis peak, but the risk of sudden spikes is arguably higher than ever.
Why Energy Markets Are So Unpredictable
There is no single cause of volatility. Instead, several overlapping forces are reshaping the market:
- Geopolitical Instability
Ongoing conflicts, particularly in Eastern Europe and the Middle East, continue to disrupt supply chains, infrastructure and trade routes. These events can move markets overnight, often without warning. (TotalEnergies Gas & Power)
- Structural Dependence on Gas
Despite progress in renewables, the UK still relies heavily on gas for electricity generation. This means fluctuations in global gas prices directly impact electricity costs. (SPICe Spotlight | Solas air SPICe)
- Supply Chain Fragility
Sanctions, infrastructure attacks and shipping disruptions have made global energy flows more fragile, increasing price sensitivity to external shocks. (TotalEnergies Gas & Power)
- Market Psychology and Trading
Energy trading desks are thriving in volatile conditions, profiting from price swings. While this adds liquidity, it also amplifies short-term volatility. (The Guardian)
- Transition to Net Zero
The shift towards renewables introduces intermittency into the system, changing how supply and demand interact and contributing to price fluctuations. (solarforschools.co.uk)
The Real Impact on Organisations
For UK organisations, volatility is not just an abstract economic concept, it has real operational consequences.
- Budgets become harder to forecast
- Contract decisions carry greater financial risk
- Price spikes can force reactive decision-making
- Financial planning cycles are misaligned with market movements
Research shows that many organisations have already experienced energy bills doubling or tripling when fixed contracts expired and they were exposed to market rates. (British Gas)
In addition, 89% of businesses report that energy price volatility has directly reduced profitability. (British Gas)
For organisations operating on tight budgets, this level of unpredictability is simply not sustainable.
The Limitations of Traditional Procurement Strategies
Historically, energy procurement has tended to follow one of two approaches:
Fixed Contracts
Locking in a price for a set period provides certainty, but it comes with risk:
- Lock in too early → you may overpay
- Lock in too late → you may miss lower prices
In volatile markets, timing becomes a gamble.
Fully Flexible Contracts
Buying energy in tranches over time allows organisations to respond to market movements. However:
- It requires expertise and active management
- It exposes organisations to short-term spikes
- It can create anxiety and decision paralysis
In today’s market, both approaches are increasingly difficult to execute effectively.
Introducing the Basket Strategy
An energy basket strategy offers a fundamentally different approach.
Rather than committing to a single price at a single point in time, a basket spreads purchasing decisions across multiple points, creating an average price over time.
Think of it as “smoothing out” the market.
Instead of trying to predict the perfect moment to buy, which is nearly impossible in today’s conditions, a basket approach accepts uncertainty and manages it.
Why a Basket Works in Volatile Markets
- Risk Diversification
A basket spreads exposure across different buying points, reducing the impact of extreme highs and lows.
If the market spikes, only a portion of your energy is affected. If it falls, you benefit from later purchasing points.
- Reduced Timing Pressure
Procurement teams no longer need to “call the market” correctly.
This removes one of the biggest risks in energy buying – making the wrong decision at the wrong time.
- Budget Stability
While prices may still fluctuate, the averaging effect creates a more predictable cost profile.
This is particularly valuable for organisations with fixed budgets and limited flexibility.
- Built-In Flexibility
Basket strategies often include mechanisms such as tolerance bands (e.g. ±10%), allowing organisations to access previous pricing positions if markets move unfavourably.
This creates a safety net that traditional contracts lack.
- Alignment with Market Reality
The key advantage of a basket is philosophical: it accepts that volatility is here to stay.
Rather than trying to eliminate uncertainty, it manages it.
Why Now Is the Moment for Basket Procurement
There are three key reasons why basket strategies are especially relevant today:
Ongoing Geopolitical Risk
With global tensions continuing to affect supply, sudden price shocks remain highly likely. (The Guardian)
Persistent Price Volatility
Even when prices fall, they don’t decline in a steady or predictable way. They can fluctuate unexpectedly and rise again just as quickly.
Structural Market Change
The energy transition is reshaping how markets behave, meaning volatility is not a short-term issue – it is a long-term feature. (University of Oxford)
In this context, strategies designed for stable markets are no longer fit for purpose.
A Realistic Approach to Energy Management
It is important to be clear: no procurement strategy can eliminate risk entirely.
Energy markets are inherently uncertain, and external events, from geopolitical conflict to extreme weather, will continue to influence prices.
However, what organisations can control is how they respond.
A basket strategy represents a shift from prediction to resilience.
Instead of asking:
“When is the best time to buy?”
It asks:
“How do we protect ourselves regardless of when prices move?”
From Risk Exposure to Risk Management
The global energy market is unlikely to return to the relative stability seen before 2020. Prices may stabilise at times, but volatility will remain a defining feature of the world.
For those responsible for purchasing energy contracts for their organisation, this requires a change in mindset.
Success is no longer about beating the market, it is about managing exposure to it.
Basket strategies provide a practical, proven way to do exactly that:
- They reduce risk
- They improve predictability
- They align with how modern energy markets behave
Where uncertainty is the only constant, the smartest strategy is not to fight volatility but build it into your approach.
And that is precisely what a basket delivers.
Looking ahead
As energy markets continue to evolve, organisations that adopt flexible, risk-aware strategies will be best placed to deal with whatever comes next.
The question is no longer whether volatility will continue, it’s whether your energy strategy is designed to handle it.
For many organisations, that means moving away from trying to “time the market” and towards a more resilient, managed approach.
The 2buy2 Energy Basket offers exactly that: a proven, group-buying solution that spreads risk, leverages collective purchasing power and protects you from market volatility through a hedged procurement strategy, meaning your energy is bought in stages over time, rather than all at once, so you’re less exposed to sudden price spikes and can benefit from price drops as the market moves.
With expert market management, transparent pricing and the ability to access wholesale energy strategies that would otherwise be out of reach, it provides a practical way to regain control in an unpredictable market.
Whether you’re coming up to renewal, struggling with budget uncertainty or simply want a more strategic approach to energy, now is the time to act.
Join the 2buy2 Energy Basket today and put a smarter, more resilient energy strategy in place before the next market spike hits.
