Households should not see immediate changes to energy bills despite gas prices leaping 54%, but experts warn longer-term increases will depend on how long Middle East volatility continues
Households shouldn’t witness any immediate alteration in their energy bills due to the Middle East crisis, but any long-term rises will hinge on how prolonged the instability remains, specialists have warned.
Analysts Cornwall Insight stated that extended uncertainty surrounding supplies could make summer restocking more challenging and progressively heighten price pressures for next winter, though there was “no suggestion of immediate system stress”.
Iran has cautioned vessels against passing through the Strait of Hormuz, through which about 20% of the world’s oil and gas travels. Several ships have been targeted in retaliation for the US and Israeli strikes which killed Ayatollah Ali Khamenei, the Iranian supreme leader.
At least 150 tankers have now dropped anchor in open Gulf waters beyond the Strait of Hormuz.
Britain’s benchmark gas price, NBP, soared by 54% on Monday. Brent crude, the global benchmark oil price, was up about 9% at 79.40 US dollars per barrel.
Qatar’s state-owned energy company QatarEnergy has also suspended its production of LNG following Iranian attacks on some of its facilities.
Cornwall Insight noted the UK was less dependent on Qatari LNG than during the post-Ukraine crisis, with Qatar providing about 6.5% of UK LNG imports over the past year, compared with about 69% from the US since 2023.
Nevertheless, it warned this could trigger increased competition for LNG from alternative sources, driving up global prices. Dr Craig Lowrey, principal consultant at Cornwall Insight, explained: “The UK’s dependence on global gas markets means movements in international wholesale prices feed directly into domestic bills.
“The situation in the Middle East and the risk of disruption to liquefied natural gas shipments through the Strait of Hormuz pushed gas prices up yesterday and further again today.”
He continued: “For those customers on the price cap, the April to June price is now set, and therefore there should be no immediate impact on bills.
“Looking ahead, the cap is calculated using an average wholesale price over three months, and we are only at the very start of the July to September assessment period, so the long-term impact will depend on how long gas prices stay elevated and how long this period of volatility remains.”
Additional experts cautioned that extended disruptions to gas exports from Qatar and the United Arab Emirates could trigger a “repeat of 2022”, when household bills soared.
In a research briefing, investment bank Stifel stated the European gas price at 100 euros per megawatt hour would be sufficient to push the UK’s energy price cap to £2,500 annually.
The cap presently sits at £1,758 per year, and is scheduled to drop to £1,641 from April 1.
Jess Ralston, head of energy at the Energy and Climate Intelligence Unit (ECIU) remarked: “The Energy Crisis Commission warned that the UK remained dangerously underprepared for another energy crisis.
“Nobody knows exactly how the next few weeks will play out, but with homes and businesses still facing the debt and after-effects of the last gas crisis, people will understandably be concerned.”
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