Martin Lewis has announced that energy deals are becoming cheaper following the signing of a memorandum of understanding between the United States and Iran. The money-saving expert had earlier predicted a drop in prices, offering rare good news for households across the UK struggling with high energy costs.
US-Iran Agreement Impacts Energy Markets
The deal, signed by former President Donald Trump and Iranian President Masoud Pezeshkian, aims to end hostilities and reopen the strategically vital Strait of Hormuz. This has led to a significant decline in oil and natural gas prices. Brent crude has fallen by approximately $7 per barrel, while UK natural gas prices have dropped by around 14 percent.
Mr Lewis confirmed that fixed energy deals are now being offered at rates about 5 percent cheaper than the current price cap. He stated: "Energy fixes have started to get cheaper, now 5% below April price cap."
Caution Ahead of October Price Cap
Despite the positive development, Mr Lewis warned that the next price cap, set to be announced by Ofgem on August 26 and effective from October to December, is unlikely to see a significant reduction. He explained that the price cap is time-lagged, meaning it responds slowly to changes in wholesale prices.
Currently, around 60 percent of households in England, Scotland, and Wales are on standard variable tariffs, which are directly influenced by the price cap. The cap is scheduled to rise by 13 percent on July 1, bringing the annual bill for a typical household paying by direct debit to £1,862—an increase of £221.
Wholesale Prices Still Elevated
Mr Lewis noted that while wholesale prices have dropped, they remain well above pre-conflict levels. He said: "The US and Iran signing a framework deal has pushed natural gas prices down... As the six-month graph shows, though, prices still have a long way to fall before returning to pre-conflict levels."
He added that the good news is cheaper fixed tariffs may emerge in the coming days, but without further substantial drops, the October price cap will likely be significantly higher than today's level.
In addition to energy updates, Mr Lewis highlighted that seven banks are now offering switching incentives of up to £220, providing one of the best selections for savers in some time.
