Household energy bills in the United Kingdom are projected to rise by approximately 10% starting in July, as a result of a surge in wholesale gas prices linked to escalating tensions in the Middle East, analysts have warned.
Energy consultancy Cornwall Insight predicts that Ofgem’s price cap for the period from July to September could reach £1,801 per year for a typical dual-fuel household.
This is about £160 higher than the cap set in April, representing a roughly 10% increase. Cornwall Insight describes this potential rise as a “cause for concern” and notes that higher gas costs will also impact electricity prices, given the UK’s ongoing reliance on gas-fired power generation.
However, the consultancy emphasises that the final cap level will depend on average wholesale prices over a three-month assessment period.
If market volatility proves to be short-lived, the actual impact may be smaller than currently projected.
Wholesale gas prices have risen sharply following missile strikes by the United States and Israel on Iran, which led to retaliatory attacks damaging critical oil and gas infrastructure in key Gulf states.
QatarEnergy has paused production of liquefied natural gas (LNG) at some affected sites, further tightening global supply.
Additionally, Iran has issued warnings to vessels regarding their passage through the Strait of Hormuz—a crucial shipping route responsible for approximately 20% of global oil and gas flows—adding further pressure to energy markets.
While Europe and the UK do not rely heavily on Qatari LNG directly, the reduced supply is expected to increase competition among major Asian importers such as Japan, South Korea, and Pakistan, which could drive up global prices.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “Looking at the April cap, the role of wholesale prices as a determinant of bills had eased given the impacts of policy costs and network costs.
“However, this latest forecast puts the role of wholesale markets firmly back in the spotlight and illustrates how exposed UK households remain to international market movements.
“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.
“Events like this reinforce the case for greater home-grown renewable generation. Reducing the UK’s reliance on volatile global gas markets is the most durable way to protect households from future price shocks.”
