Energy bills forecast to rise 10% in July as Middle East conflict drives up gas prices
Energy bills could jump by £160 from July, with forecasters putting the next price cap at £1,801 for a typical dual-fuel household.
Cornwall Insight, an energy research consultancy, published the figure on Wednesday as wholesale gas prices climbed following escalating conflict in the Middle East.
The projected July cap would represent a 10% rise on the April level, which Ofgem announced last week would fall by £117.
The surge in wholesale prices follows US and Israeli missile strikes on Iran.
Retaliatory attacks from Iran damaged oil and gas infrastructure across Gulf states.
QatarEnergy has been forced to pause liquefied natural gas production at several sites hit during the strikes.
Iran has warned ships not to use the Strait of Hormuz, a route that carries around 20% of global oil and gas.
The UK does not rely heavily on Qatari LNG, with the majority of its supply coming from the United States.
Reduced Qatari output is expected to push up competition across global markets, as countries including Japan, South Korea and Pakistan seek alternative cargoes.
Cornwall Insight says the UK and Europe may need to raise prices to secure supply in that environment.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: “While the rise is eye-catching, any immediate concern should be tempered.
“We are still early in the assessment period for the July cap, and what happens in the energy markets over the next three months will be the key factor, rather than this spike alone.”
Ofgem calculates the final cap using average wholesale prices across a three-month assessment period, meaning the current spike may not translate fully into the final July figure.
EU gas storage is low following winter, which analysts say could make refilling more difficult and costly if supply uncertainty continues into summer.
Richard Neudegg, director of regulation at Uswitch.com, said: “This prediction is a stark reminder of why relying on the price cap leaves customers exposed to global events.
“Energy markets remain sensitive to major events, especially when they involve key gas transport routes.”
Neudegg said customers on fixed deals are protected for the duration of their contract, while those on standard tariffs are subject to Ofgem’s quarterly cap review.
He added: “At the moment, there are still fairly-priced fixed deals available that are below these predictions, and could be a reasonable option for households seeking stability on their energy rates.
“Those who switch to a fixed deal will also receive a reduction to their unit rates once the Government’s energy bill cuts take place from 1 April.”
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