Energy prices affected by Middle East crisis: how will it impact your bills?
Large energy providers, including British Gas and Eon Next, are offering limited switching opportunities to new customers as conflict continues in the Middle East.
It comes as new predictions suggest that variable energy prices could jump up this summer as a result of volatile global gas prices.
At the beginning of March, prices were expected to stabilise for the rest of the year following energy regulator Ofgem’s recent price cap cut, which will be in effect from 1 April.
But a lot has changed since then. A forecast released by industry consultancy Cornwall Insight on 31 March predicted an increase of £288 a year, or 18%, for the average typical energy bill the next time prices change in July, for those on variable, out-of-contract rates. This takes into account the continuing conflict between the United States, Israel and Iran, and its impact on Gulf states that are critical to the global energy market.
Both Cornwall Insight and the government have reiterated that these predictions are still early and that much could still change in the time between now and July.
Whether the government provides extra help for energy bills 'depends how long the conflict goes on', according to Secretary of State for Energy Security and Net Zero Ed Miliband.
Previous advice for households was that it's worth switching to a fixed deal, as the energy market has consistently offered fixed tariffs cheaper than the price-capped rates.
That advice still stands. However, with current price volatility, the choice of competitive tariffs is limited and energy companies are updating prices regularly.
Heating oil prices are also rising and companies are cancelling orders. The government has promised a certain amount of help for heating oil customers. Find out more: Heating oil prices spike with Middle East conflict: here's what you can do.
Read more: how to get the best energy deal
Energy bill changes in April
All energy bills will still go down from 1 April as planned. The new predictions are for the price cap from 1 July.
If you have a variable tariff:
A typical household* on a variable tariff will pay £1,641 a year from April, a drop of £117 a year compared with January-March. That’s an average monthly saving of £9.75.
The price cap doesn’t limit your total bills. It caps the cost of each unit of gas and electricity you use. If your home uses more than average, you’ll pay more. If your home uses less, you’ll pay less.
Read more: the energy price cap will drop by 7% in April 2026
If you have a fixed tariff:
Fixed-tariff customers will also see bills cut from April. That’s because the costs of most of two government schemes (the Energy Companies Obligation and Renewables Obligation) will be removed from all customers’ bills.
The government says this change could save a typical household around £150 a year. Look out for communication from your energy supplier confirming how your rates will change and how much you’ll save.
Besides this, your fixed tariff's rates won't change until the end of your contract.
See more: all households to see energy bills cut from 1 April
Should I fix an energy tariff now?
The spike in global gas prices since the start of the conflict is likely to have an impact on your home energy bills, though we don't know by how much or for how long.
When setting its quarterly price cap, the energy regulator, Ofgem, looks at average wholesale prices over three months. Its next review is due at the end of May, and will take effect on 1 July.
So there's still time for a lot to change. But with UK gas prices having more than doubled since the start of the conflict in the Middle East, it’s not a good time to be on a variable tariff, or a tariff tracking the price cap.
If you're not already on a fixed tariff, you should compare prices and see what your best option is. With such a volatile market, deals are changing quickly.
However, try not to panic and fix a deal that's too expensive.
If you manage to find a fixed deal, check that it's as close to the April price cap as possible (or below it). Things are changing rapidly, so we don't know how long the price spike will continue, nor when cheaper fixed deals might return.
When comparing fixed prices, remember that all fixed rates will decrease from 1 April to take into account the cut in government scheme costs. Some companies are already factoring these cuts into their quotes so make sure you’re comparing like for like.
Check for exit fees:
- Octopus Energy has introduced a £100 exit fee per fuel on its latest tariff, as a result of price volatility.
- Some tariffs from British Gas and EDF Energy have higher exit fees than they did previously.
Use our free, independent energy comparison service to compare gas and electricity prices across the whole energy market and find the best provider for you.
Northern Ireland electricity price rises
Two electricity firms have announced price rises effective from 1 April, affecting over 55,000 customers:
- Click Energy is increasing its tariff by 9.5%, adding around £108 to a typical customer's bill
- Share Energy is increasing its tariff by 26.4%, adding around £213 to a typical customer's bill.
The increases are the same whether you are a credit or prepayment customer.
If you're worried about affording your bills, get in touch with your supplier.
Consider changing how you pay, how you get your bills or switching supplier to see if you can pay less.
A standard tariff and paying when you receive your bills is the most expensive way to pay for your electricity, according to the Consumer Council for Northern Ireland.
Read more about Northern Ireland electricity and gas providers and help if you're struggling to pay your energy bills.
Help if you're worried about paying energy bills
No new support has been announced by government for gas and electricity bills in Great Britain. If you heat your home with oil, Prime Minister Keir Starmer announced £53million of support for households in vulnerable situations.
Find out more: Heating oil prices spike amid Middle East conflict: here's what you can do.
If your fixed tariff is ending and you haven't set up a new tariff, then you'll move onto variable price-capped rates automatically when your contract finishes.
If your fixed tariff was much cheaper than the price cap, then you'll see your bills increase. But they'll go down again from 1 April when the price cap reduces.
If you're worried you'll struggle to pay your bills, contact your energy supplier as soon as possible.
Help available can include:
- changing how you pay (direct debit is typically cheapest)
- reviewing your payments and debt repayments
- reducing your payments or a payment break
- more time to pay
- accessing emergency credit (if you have a prepayment meter)
- access to hardship funds.
Read more: Help if you're struggling to pay your energy bills.
Why is the Iran conflict affecting UK energy prices?
The wholesale global price of gas is currently extremely volatile. The wholesale gas price is what energy firms pay for the energy we use and is passed on to customers. It's a big driver of UK electricity prices too.
Oil and gas infrastructure across Gulf states has been damaged, including the world's largest Liquefied Natural Gas (LNG) plant Ras Laffan in Qatar, South Pars gas field in Iran, a gas facility in the UAE and oil refineries in Quwait. Iran has effectively closed the Strait of Hormuz, a vital shipping route for about 20% of global oil and gas.
Most of the UK’s LNG comes from the US and only a small proportion is imported from Qatar. However, gas storage levels in the EU are low after winter and there is increased competition in the global LNG market from those which rely more on LNG from the Middle East.
We don’t know by how much and for how long instability in the Middle East will impact global gas prices.
Energy regulator Ofgem said: 'The situation is still developing, and it is too early to know how long-lasting any market impacts may be.
'While the UK's energy suppliers remain secure, sustained disruption to global gas markets could put pressure on prices in future cap periods.
'Ofgem continues to closely monitor developments and works with government, industry and system operators to protect consumers.'
* Using a medium amount of energy, defined by Ofgem as 11,500kWh gas and 2,700kWh electricity per year.
