Household energy bills in Great Britain could rise by over £330 a year to almost £2,000 from this summer, as the Iran war pushes the UK's gas market to three-year highs. According to consultancy Cornwall Insight, a typical dual-fuel bill is now forecast to reach £1,972 annually from July under the government's price cap, up from an earlier estimate of £1,800 two weeks ago.
The current cap, set by Ofgem at £1,641 for April to June, provided a brief respite, but prices are expected to climb sharply. The latest forecast reflects a 20% increase driven by a surge in European gas prices after a significant escalation in the Middle East conflict, including damage to a major liquefied natural gas facility in Qatar and ongoing disruptions to tanker routes through the Strait of Hormuz.
Gas prices in Europe rose 30% on Thursday before easing slightly on Friday, but remain double pre-war levels. UK gas for next month delivery fell 2% to 153p a therm, still nearly double the rate before the conflict began. Motorists are also affected, with petrol prices up nearly 9% in three weeks to 144.51p a litre, and diesel 17% higher at 166.24p, according to the RAC.
Households face additional pressure from rising mortgage rates. The average two-year fixed rate has increased from 4.83% at the start of March to 5.35%, adding about £900 a year to a £250,000 loan over 25 years. If base rates rise further, costs could increase by £1,000 to £1,500 annually, warns Moneyfacts.
The International Energy Agency has urged governments to consider emergency measures to reduce energy use, including promoting remote work, public transport, and lowering speed limits. The IEA's recommendations focus on road transport, which accounts for 45% of global oil demand.
