Oil jolt triggers 5.4-point gap among UK energy stocks

Q: What caused National Grid shares to decline today?

National Grid (LSE: NG.) ended at 1,193p in London, falling 2.05%. The FTSE 100 rose 0.34%, marking the stock’s underperformance. (MarketWatch) Its NYSE ADR changed hands at about $79.28 as of 18:44 UTC. There were no new earnings or operating updates behind today’s drop. The precise catalyst is unclear and not tied to any announced guidance revision. Shares are still 16.5% under March’s 1,428.5p peak. (London Stock Exchange)

Q: How does RIIO-T3 impact the quality of earnings?

RIIO-T3 is scheduled from April 2026 to March 2031. (Ofgem) National Grid has agreed to the UK Electricity Transmission settlement. It anticipates roughly a 9% return on equity during FY27, aiming for an average return above 9% across the period. Regulatory arrangements are already in place for about two-thirds of the planned investment. Supply chain and delivery strategies now support around three-quarters of the £70 billion initiative. This level of certainty provides support, though cost overruns and delivery penalties continue to pose significant risks.

Oil jolt triggers 5.4-point gap among UK energy stocks

LONDON, July 29, 2026, 20:02 BST

BP LON:BP gained 3.39%, as National Grid LON:NG declined 2.05%.
DCC Energy LON:DCC finished trading at 6,350 pence, with a 2.8% gross premium remaining relative to the agreed cash bid.
The FTSE 100 rose 0.34% following yet another intraday record high.

London’s cash market remained shut. BP closed at 543.5 pence, while National Grid settled at 1,193 pence. The 5.44-point spread marked the day’s most prominent UK energy divergence.

Investors favored direct oil holdings. Regulated network investment failed to provide a similar hedge, even as new signs of activity appeared.

DCC was listed in a separate group, with its shares reflecting the likelihood of a takeover instead of reacting to Wednesday’s oil price move. The stock ended the session 175 pence below the agreed cash offer of £65.25.

Company	July 29 closing price	Change Wednesday	Change week ended July 24	Change this week to Wednesday
BP	543.5p	up 3.39%	up 6.05%	down 0.89%
DCC Energy	6,350p	up 0.32%	unchanged	up 1.03%
National Grid	1,193p	down 2.05%	down 1.55%	down 3.60%

Weekly performance figures are calculated from the prior Friday’s closing value.

BP rose 6.1% in the previous full week. A rebound on Wednesday narrowed its loss for the current week to 0.9%. National Grid declined in both intervals.

Oil jumped roughly 7% after airstrikes resumed in the Middle East. U.S. crude inventories dropped by 7.2 million barrels, marking their lowest point since 2018. Both developments provided an instant earnings boost for BP.

The FTSE 100 rose 0.34% to close at 10,908.41, after reaching an all-time high of 10,951.06 earlier in the session. The energy sub-index surged by 2.9%.

The distribution division of National Grid handled a significant operational burden after a high-voltage issue close to Derby left 2,545 households without electricity. By 12:48 BST, power was restored to 481 residences.

The Northants Telegraph mentioned an 11-day road closure in Rushden next month due to National Grid work. Both local reports did not mention any financial repercussions. There is no explanation for Wednesday’s share decline.

The scale of investment is more apparent. National Grid’s spending reached £11.6 billion in fiscal 2026. Net debt increased by 7% to £44.2 billion.

Management forecasts a rise in debt of slightly more than £6 billion for the year. The company is also signalling underlying earnings-per-share growth in the 13% to 15% range. Investors face decisions on both fronts.

DCC’s price outlook is more clear-cut. KKR NYSE:KKR and Energy Capital Partners announced a £5.75 billion acquisition deal on Monday. The current closing spread provides a 2.8% gross return, excluding any timing and execution risk.

The offer could increase by £1.25 per share should Nexora reach a minimum sale price of $800 million. Fidelity remains against the deal. Approval risk therefore remains a factor.

Chief Executive Donal Murphy stated that DCC is now more streamlined. However, he noted, “that really hasn’t translated into the value that private capital is willing to put on our business.” Reuters

BP’s initial guidance suggests oil realisations will add $1.8-$2.1 billion compared to the previous quarter. The company also highlights around $1 billion in impairments. Second-quarter results are due on August 4.

The Bank of England will set interest rates on Thursday, with markets broadly anticipating they will remain unchanged. The decision is especially significant for National Grid, which is sensitive to changes in financing costs.

Risks: Oil prices may retreat swiftly should regional supply concerns subside. DCC’s deal could falter if shareholders decline the offer. An increase in funding expenses would put pressure on National Grid’s leveraged expansion.

Wednesday’s update was focused. Scarcity commanded a premium. DCC benefited from takeover funds, and network investments continued to require patience.

TS2 TECH • EXTENDED COVERAGE

Further analysis

Editorial insight

What caused National Grid shares to decline today?

National Grid LSE:NG. ended at 1,193p in London, falling 2.05%. The FTSE 100 rose 0.34%, marking the stock’s underperformance. MarketWatch Its NYSE ADR changed hands at about $79.28 as of 18:44 UTC. There were no new earnings or operating updates behind today’s drop. The precise catalyst is unclear and not tied to any announced guidance revision. Shares are still 16.5% under March’s 1,428.5p peak. London Stock Exchange

What were the actual findings in the most recent full-year results?

Underlying operating profit increased by 6% to £5.68 billion for FY26. Statutory operating profit was up 10% to £5.431 billion. Gross revenue from continuing operations fell 4% to £17.687 billion. Underlying EPS rose 6% to 78.0p, or 8% when measured at constant currency. Capital investment expanded by 18% to £11.576 billion, supporting 10.9% growth in assets. Regulatory timing under-recovery totaled £636 million for the period. National Grid

Is management on track to achieve 13–15% EPS growth within the year?

The target suggests underlying FY27 EPS of between 88.1p and 89.7p. Net revenue for UK Electricity Transmission is set to increase by slightly less than £850 million. Net revenue in both New England and New York is projected to climb by about $450 million each. Part of these gains will be offset by greater depreciation and operating expenses. Management anticipates an additional rise of around £200 million in net finance costs. While the range appears attainable, execution and exposure to storms remain key considerations.

Does the current price make the stock undervalued?

National Grid is valued at around £60.0 billion at 1,193p per share. Investing.com The stock changes hands at about 15.3 times FY26 underlying earnings per share. Based on management’s forecast for FY27 EPS, the price-to-earnings ratio falls to about 13.3–13.5 times. The trailing dividend yield stands near 4.1% at the current close. Shares are currently trading 16.5% below their 52-week peak. The valuation appears justified and shares are not in distress.

What is the level of security for the dividend?

The dividend for FY26 reached 48.49p, an increase of 3.8% compared to the prior year. Based on the latest closing price, this equates to an approximate yield of 4.1%. The dividend was covered 1.6 times by underlying earnings, reflecting a payout ratio of about 62%. Distributable reserves as of March 31 were £17.0 billion. Management is aiming for growth in line with CPIH, factoring in a 25% annual uptake of scrip, which eases cash outflows but leads to slight dilution of shares.

Is National Grid able to raise £70 billion without conducting an additional rights issue?

National Grid targets at least £70 billion in investment by FY31. Expenditure for FY27 is expected to reach nearly £13 billion, roughly 10% higher than FY26. Net debt is projected to climb by just over £6 billion from the £44.16 billion level. Regulatory gearing is forecast to rise from 61% to about 64%. The FFO-to-adjusted-debt and retained-cash-to-adjusted-debt ratios stood at 13.0% and 9.3%, both surpassing required levels. As of May 13, National Grid held £8.0 billion in undrawn committed lines. The framework does not include a stated equity raise, though upcoming requirements are unclear.

How does RIIO-T3 impact the quality of earnings?

RIIO-T3 is scheduled from April 2026 to March 2031. Ofgem National Grid has agreed to the UK Electricity Transmission settlement. It anticipates roughly a 9% return on equity during FY27, aiming for an average return above 9% across the period. Regulatory arrangements are already in place for about two-thirds of the planned investment. Supply chain and delivery strategies now support around three-quarters of the £70 billion initiative. This level of certainty provides support, though cost overruns and delivery penalties continue to pose significant risks.

Does Joulent’s $1.75 billion investment justify the associated risks?

National Grid is set to spend $1.75 billion to acquire a 35% stake in Joulent. Project Kilby, a 2.67GW facility in West Texas, is an equal partnership with Chevron. The project features a 20-year power contract to supply a Microsoft-run data centre campus. The first power output is aimed for 2028, with a final investment decision expected by year-end. This investment is outside the £70 billion strategy and uses available balance-sheet capacity. Free cash flow is projected to turn positive only in the early 2030s. This brings added growth potential, but involves significant execution risk. SEC

What is an appropriate projection for the share price over the next 12 months?

A base scenario considered defensible stands at 1,350p, with a possible range of 1,060p–1,520p. The central case assumes EPS around 89p and applies a 15.2x multiple. This would represent roughly 13% upside compared to the current 1,193p close. When adding the 4.1% yield, the expected total return is nearly 17%. Investing.com The average among 15 analysts is 1,362p, with estimates stretching from 1,060p up to 1,500p. Investing.com Triggers include the company’s half-year results in November and Joulent’s decision at year-end. Potential risks are higher rates, cost overruns, extreme weather, or dollar weakness.

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Marcin Frąckiewicz is the founder and CEO of TS2 Space, a satellite communications company serving customers around the world. A graduate of the Warsaw School of Economics (SGH), he has more than two decades of experience in telecommunications, satellite services and technology ventures. He writes about satellite communications, space technology, artificial intelligence and the stock market, with a particular focus on technology companies, semiconductors, emerging industries and the trends shaping global innovation. Follow Marcin Frąckiewicz on Google News, Facebook. or Linkedin.