Brits have been warned of another rise in energy bills if the conflict in Iran continues. Wholesale gas prices have risen 32%, reaching their highest level since early 2023.
The conflict started after the US and Israel launched a wave of strikes, killing Iran’s Supreme Leader Ali Khamenei. Iran retaliated, with blasts reported in Israel, the UAE, Qatar and Bahrain. Around 300,000 Britons are believed to be in countries targeted by Iran, with the Foreign Office officials working on contingency plans, including a mass evacuation. Sir Keir said the Government is “looking at all options to support our people”. Because of Iranian strikes, Qatar’s state-owned gas company was forced to halt production. Iran has also blockaded the Strait of Hormuz, which is where a fifth of the world’s gas supply passes through when leaving the Gulf. The country’s military has threatened to set fire to any ship attempting to use the shipping route, with reports of a fuel tanker being attacked by two drones.
Investment bank Stifel has said the UK’s energy price cap could rise by 52%, the same as the rate seen when Russia first invaded Ukraine in 2022.
This would push energy bills to £2,494 a year, up from the current cap of £1,641. If the rise stays at 32%, bills will reach £2,166, as Ofgem is forced to adjust the cap to wholesale prices.
Gas prices rose to 151p per therm (equivalent to burning 100 cubic feet of natural gas) yesterday (March 3), before falling to 148p.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said the risk to consumers remains limited because the price cap is locked in for the spring quarter.
He said: “Bills are effectively protected until at least July 1, 2026, because the April to June cap has already been set. If wholesale prices fall back, the impact may be limited. But if elevated prices persist, they will affect Ofgem’s next price cap decision in May, which takes effect from July.
“The only lasting protection for households is to cut gas demand through a nationwide insulation programme, expand homegrown renewables and reform energy pricing so bills are no longer tied so closely to global fossil fuel prices.”