Key Points
- Octopus Energy CEO Greg Jackson warns that energy markets are in “turmoil” due to the Middle East conflict, with Iran effectively closing the Strait of Hormuz, which handles 20% of global oil and gas supplies, and Qatar unable to honour gas contracts.
- Wholesale gas prices have nearly doubled since the conflict began on Saturday, leading major suppliers like British Gas, Eon Next, EDF, and Octopus to limit or withdraw fixed-price tariffs and introduce exit fees.
- Cornwall Insight predicts Ofgem’s July-September price cap could rise to £1,801 annually for a typical dual-fuel household, a 10% increase or £160 higher than the April cap, due to volatile wholesale gas prices.
- Energy Secretary Ed Miliband states he is confident in UK energy supply security after consultations with National Gas and the National Energy System Operator (Neso).
- Resolution Foundation warns that persistent price spikes could add over £500 to typical household energy bills in summer and push inflation up by one percentage point.
- Analyst Chris Wheaton suggests if wholesale prices hit 250p per therm, Ofgem’s cap could reach £2,500; current prices exceeded 140p per therm.
- Professor David Miles from the Office for Budget Responsibility calls energy-driven inflation “unambiguously bad for everyone in the UK”.
- QatarEnergy has paused LNG production at affected sites; Iran warns vessels against passing through the Strait of Hormuz.
- Fixed tariffs now cost about £100 more annually than pre-conflict; Octopus introduced £75 exit fees per fuel.
- April price cap drops to £1,641 (£117 less), but July outlook volatile; experts urge switching to available fixed deals like Outfox Energy’s £1,640 tariff.
- Dr Craig Lowrey of Cornwall Insight emphasises UK exposure to global markets and need for more renewables.
- Brigadier General Ebrahim Jabbari of Iran’s Revolutionary Guard declares the Strait of Hormuz “closed” and vows to set fire to passing ships.
Energy markets plunge into chaos as Middle East flares up, hitting UK households hard. Octopus Energy, the UK’s largest household supplier, has sounded the alarm over surging prices. Escalating conflict involving the US, Israel, Iran, and Gulf states threatens global supplies, analysts say.
What is causing the energy market turmoil?
As reported by Jamie Grierson of The Independent, Octopus Energy CEO Greg Jackson stated on Times Radio: “In energy terms, Iran has effectively closed the Strait of Hormuz, which transports 20 per cent of the world’s oil and gas supplies, and Qatar has said it cannot honour its contracts to deliver its gas, so the energy markets are in a state of turmoil.”
The Strait of Hormuz, at the southern end of the Persian Gulf, sees about 20% of global oil and LNG pass through, per ITV News consumer editor Chris Choi, as reported by Rhys Nelson.
Iran has declared it “will not permit a single drop of oil to exit the region,” threatening ships, while the US considers escorting tankers, Grierson notes.
Missile strikes by the US and Israel on Iran prompted retaliatory attacks damaging Gulf infrastructure; QatarEnergy paused LNG production, tightening supply.
Wholesale gas prices nearly doubled since Saturday; Brent crude spiked on geopolitical risk premiums, per Right Fuel Card analysis.
Which UK energy companies have issued warnings or changed tariffs?
Large providers including British Gas, Eon Next, and EDF offer limited switching to new customers, as detailed by Sarah Ingrams, principal researcher at Which? Their websites state limited tariffs amid volatility.
Octopus Energy raised fixed-price tariffs and added £75 exit fees per fuel since the conflict; Jackson stressed: “Fixed tariffs are predicated on the energy company purchasing a year’s worth of energy for you at the wholesale market… new fixed are consequently higher.”
“Where fixed tariffs are still available, they are now generally costing about one hundred pounds more annually compared to a year prior to the conflict,” Jackson added.
British Gas, EDF, and Eon Next display messages of limited availability; Octopus deals reflect new volatility.
Outfox Energy’s 12-month fixed (Fix’d Dual Mar26 12M v3.0) at £1,640/year with £75 exit fees per fuel remains, adjusting to government changes from April.
Eon Next launched Next Fixed 12m v114 at £1,781/year (£50 exit); EDF’s Simply Fixed 2Yr Mar28v3 at £1,772/year (£75 exit), both dropping post-April.
Uswitch data shows fixed deals halved since hostilities began; remaining ones rose.
How will this affect UK household energy bills?
Cornwall Insight forecasts Ofgem’s July-September cap at £1,801 for typical dual-fuel homes, £160 (10%) above April’s, warns London Loves Business.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “This latest forecast puts the role of wholesale markets firmly back in the spotlight and illustrates how exposed UK households remain to international market movements.”
“While the rise is eye-catching, any immediate concern should be tempered. We are still early in the assessment period for the July cap,” Lowrey added.
April cap falls to £1,641 (£117 or 7% drop) for variables, per Which?, with fixed tariffs also cutting via government schemes like Energy Companies Obligation removal (£150 save).
If prices hit 250p/therm, cap could reach £2,500, per analyst Chris Wheaton; Tuesday exceeded 140p.
Resolution Foundation: Persistent rises add £500+ to summer bills, 1% to inflation.
Professor David Miles, Office for Budget Responsibility: “Inflation driven by energy is unambiguously bad for everyone in the UK.”
What is the UK government’s response?
Energy Secretary Ed Miliband told MPs: “I’ve been in touch with National Gas and Neso, who are confident about our security of supply [of gas].”
Miliband warned opposition: “I warned the opposition failed to learn the lessons from the Ukraine crisis… a dogma of opposing clean energy would damage this country.”
April bill cuts stem from Labour’s prior measures.
Lowrey reinforces: “Events like this reinforce the case for greater home-grown renewable generation. Reducing the UK’s reliance on volatile global gas markets is the most durable way.”
Should households fix energy tariffs now?
Experts advise comparing fixed deals cheaper than cap, per Which? Ingrams: “With gas prices volatile, it’s not a good time to be on a variable tariff.”
Check market; deals change fast. Outfox, Eon Next, EDF options exist but volatile.
“Don’t panic and fix a deal that’s too expensive,” Ingrams cautions.
Global LNG competition rises as Asia (Japan, South Korea, Pakistan) bids up reduced Qatari supply, though UK sources mostly US.
Brigadier General Ebrahim Jabbari: Strait “is closed”; fire to ships.
US-Israel strikes hit infrastructure; Iran retaliates.
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