UK households are facing a sharp rise in energy bills this summer, with costs expected to increase by more than £300 as the ongoing Iran crisis drives up global gas prices.
Energy consultancy Cornwall Insight has forecast that Ofgem’s price cap could jump to £1,973 in July, up from £1,641 set for April — an increase of £332. The revised estimate marks a significant rise from the group’s earlier forecast of £1,807.
If confirmed, the increase would push energy bills to their highest level since July 2023, when prices surged following Russia’s invasion of Ukraine.
The spike is being driven by a sharp rise in wholesale gas prices, which have more than doubled since the US launched strikes on Iran at the end of February. Analysts warn further increases are possible as tensions across the Middle East continue.
Recent Iranian strikes on a major gas hub in Qatar have intensified market fears, causing UK natural gas prices to surge by nearly 25 per cent.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said the impact of recent market volatility is likely to be felt for months.
“Due to the nature of the cap methodology used by Ofgem, even if wholesale prices quickly return to pre-conflict levels, some of this recent volatility will be baked into the July 2026 cap,” he said.
“The ultimate scale of any increase will depend on how long the disruption continues, and while the cap can shield consumers from short term fluctuations in the market, it cannot offset a sustained rise in wholesale market prices.”
The escalation in the region — with ongoing exchanges of strikes between the US, Israel and Iran — has raised concerns about the security of global energy supplies.
Iran has also threatened to disrupt shipping through the Strait of Hormuz, a vital route through which around 20 per cent of the world’s oil and gas supplies pass. Any disruption to this corridor could have major consequences for global trade and energy markets.
Ofgem’s energy price cap determines the maximum amount suppliers can charge households on standard variable tariffs, covering the majority of UK homes. The cap is expressed as an annual bill for a typical household.
Energy bills are currently set to fall by £117, or around seven per cent, from April to June after Ofgem announced a reduction earlier this year. However, the latest forecast suggests those savings could be quickly reversed.
The regulator is expected to confirm the price cap for the July to September period by 27 May, with households bracing for further increases as the global energy market remains volatile.