Martin Lewis has issued a stark warning about the trajectory of UK energy bills, stating that the resumption of strikes between the United States and Iran will drive costs higher for households. The money-saving expert's comments come after oil prices surged following the renewed closure of the Strait of Hormuz, a critical waterway for global energy supplies.
Renewed Conflict Sends Oil Prices Soaring
The Strait of Hormuz, through which approximately 20% of the world's oil passes, has been closed again due to the escalation of hostilities between the US and Iran. This has caused a sharp spike in wholesale energy prices, which directly impacts the energy price cap for UK households. The latest price cap, announced in July, had already increased by 13% as a result of the ongoing Middle East conflict that began on February 28.
Mr Lewis stated: "Graphs show what's likely to happen to energy bills...it ain't looking good." He explained that the big changeable factor in home energy prices is wholesale rates, and the UK natural gas rate is the main driver of both gas and electricity bills, as gas is used in electricity generation.
Impact on the October Price Cap
The next price cap, to be announced on August 26 and effective from October 1 to December 31, was already predicted to rise despite a Memorandum of Understanding (MOU) between former President Donald Trump and Iran. However, the resumption of strikes has worsened the outlook. Mr Lewis noted: "Two weeks ago, it was likely October's price cap would be similar to July's. Now, it is very likely we'll see it materially rise for winter, and that's on top of July's 13 per cent rise."
The price cap is based on average wholesale rates from May 19 to August 18, 2026. The recent spike in wholesale prices due to the Middle East escalation will directly influence the cap, meaning households face higher bills heading into the colder months.
Fixed Deals and Consumer Options
Mr Lewis highlighted that around 60% of homes in England, Scotland, and Wales are on standard variable tariffs, which are directly tied to the price cap. Fixed-rate deals, however, move more quickly in response to wholesale rates. A couple of weeks ago, the cheapest fixes were 15% below the current cap; now they are around 11% below. While fixing can offer some relief, it also carries risk if prices fall.
He added perspective: "For some perspective, the jump due to the Middle East conflict is still nothing close to the impact of the start of the Ukraine conflict. The price cap is currently still roughly 25 per cent less than the rate set for the energy price guarantee (in effect, an emergency cap set during the Ukraine crisis on the maximum price cap customers could be charged)."
Broader Context and Future Outlook
The developments come as a blow to British households, who had seen prices begin to drop after the MOU was signed. Fixed prices quickly fell by about 5% in the days following the announcement, but that relief has been erased. Mr Lewis stressed that due to the time lag between the new cap and current events, peace would not automatically result in a drop in the price cap. The energy price cap remains a key factor for millions of households, and the outlook for winter is concerning.
