Household energy bills in Great Britain could rise by more than £330 a year to nearly £2,000 from this summer, according to a forecast by energy consultancy Cornwall Insight. The predicted annual dual-fuel bill of £1,972 would mark a 20% increase from the current price cap of £1,641, set by regulator Ofgem for April to June.
The sharp rise is attributed to escalating conflict in the Middle East, which has pushed UK gas prices to three-year highs. European gas prices surged 30% on Thursday after Qatar confirmed extensive damage to the world's largest liquefied natural gas processing facility, with repairs potentially taking up to five years. Additionally, tankers from the Gulf remain unable to access global markets via the Strait of Hormuz, effectively under Iran's control.
While gas prices eased slightly on Friday, they remain almost double pre-war levels. The UK's next-month gas delivery price fell 2% to 153p per therm, down from Thursday's peak of 180p. Petrol prices have risen nearly 9% in three weeks to 144.51p per litre, with diesel up 17% to 166.24p, according to the RAC. Brent crude traded at around $109 a barrel on Friday, nearly 50% higher than before the conflict.
Households also face higher mortgage costs despite the Bank of England holding base rates at 3.75%. The average two-year fixed mortgage rate has risen from 4.83% in early March to 5.35%, adding about £900 annually for a £250,000 loan over 25 years. If base rates rise to 4% or 4.25%, mortgage costs could increase by a further £1,000 to £1,500 per year.
In response, the International Energy Agency has urged governments to consider Covid-style emergency measures to reduce energy use, including promoting working from home, public transport, and lowering highway speed limits by at least 10km/h to cut fuel consumption.
