The US and Israel carried out joint strikes on several key Iranian sites on February 28 and Iran retaliated by striking key sites across the region and closing the critical Strait of Hormuz trade route – this has rocked global energy markets
While Brits are soaking up the Spring heatwave, experts have warned that millions could be hit with a sharp rise in energy bill prices this summer. This could get even worse when the cold weather rolls around.
Cornwall Insight has predicted that the household energy price cap will rise by £209 a year from July, pushing the average annual dual-fuel bill from £1,641 to around £1,850.
It is understood that this increase, a rise of 13% in three months, will largely be driven by rising wholesale energy prices as a result of the Iran war. Prices may remain high into autumn and winter, experts have said.
The Middle East conflict has sparked chaos in global energy markets. The US and Israel carried out joint strikes on several key Iranian sites on February 28 and Iran retaliated by striking key sites across the region and closing the critical Strait of Hormuz trade route.
About 20% of global oil traded passes through the strait and the closure has seen jumps in fuel prices across the world.
Instability in oil and gas prices has fed into UK household energy bills.
Cornwall Insight has warned that energy bills could reach to nearly £2,000 a year.
Craig Lowrey, principal consultant at Cornwall Insight, said forecasts had dramatically worsened in recent months.
“Over the past few months, we’ve watched our forecasts shift from showing virtually no quarter-on-quarter increase to a 13% rise in current bills – with this change due to the impacts of the Middle East conflict,” he said.
Energy usage is generally lower in the warmer months, but experts have said they are concerned about what will occur later in the year when temperatures drop and demand spikes.
Current forecasts suggest October’s price cap could remain close to July’s elevated levels, Cornwall Insight has forecast.
That means households may not get the usual autumn relief.
“While households will understandably be frustrated by a rise during the summer, the bigger concern is October, when demand picks up again,” the consultancy said.
Even if the conflict ended immediately, damage to infrastructure and disrupted global supply chains mean energy prices are unlikely to return to the pre-war levels quickly.
The UK Government is being urged to set out emergency support plans before winter arrives.
End Fuel Poverty Coalition warned millions of families already struggling with energy debt could face an extremely difficult winter if prices remain high.
Experts have suggested a few simple changes households can make in the warmer months to improve home energy efficiency before heating systems are needed again.
- Bleeding radiators
- Checking for draughts
- Servicing boilers
- Improving insulation
- Washing clothes at 30°C
- Avoiding unnecessary tumble dryer use
- Batch cooking meals
- Using dishwasher eco settings
Ofgem will officially announce the next energy price cap on May 27.
