A leap in wholesale gas prices after an attack on the world’s biggest LNG plant has fuelled fears of spiralling energy bills for UK households
The government was urged to convene an emergency meeting as a 35% surge in gas prices led to fears of an “energy bill disaster” for millions of households.
Wholesale prices rocketed after Iran launched strikes on the world’s biggest liquefied natural has plant in Qatar. US President Donald Trump responded by threatening to “massively blow up” Iran’s major gas field if Tehran attacks Qatar again.
As the Middle East conflict took a worrying turn, oil prices jumped 11% to $119 a barrel.
The spike in the traded cost of oil and gas has ratcheted up concerns of a global economic shock that will feed through to households and businesses, adding to what has been dubbed “Trumpflation”.
There were already predictions from think tank the Resolution Foundation that energy bills could jump by £500 later this year. The latest spike makes that more likely, with the rise in oil prices set to deliver yet more pain at the pump for millions of UK motorists.
Lib Dem leader Ed Davey said: “The Government is sleepwalking into an energy bill disaster this July. The 25% spike in gas prices this morning should send alarm bells ringing in Number 10.
“We need an emergency COBRA meeting today, and a plan set out to protect households from an impending £500 bombshell set to devastate family finances.”
Energy bills for most UK households will actually fall by around 7% from April 1 thanks to regulator Ofgem’s price cap, which was set before the Iran war erupted.
But all eyes are on what will happen when the cap is next reviewed in July, when the full impact of the jump in wholesale costs will be felt.
There is growing pressure on Labour to commit to helping households with any looking bills shock.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “These gas and oil prices haven’t been seen since the winter of 2022/23 when an Energy Price Guarantee was needed to protect households from the worst excesses of our exposure to global markets.
“The reality is that households will face a ‘Trump Tax’ on their energy bills as a result of this war and the case for Government action to support households is becoming impossible to ignore.”
A jump in energy and fuel prices are also forecast to feed through to a higher inflation in the UK and around the world.
Thomas Pugh, chief economist at leading tax and consulting firm RSM UK, warned inflation could leap from the current 3% towards 5%.
“Admittedly, natural gas prices are still well below their 2022 peaks, but remember the initial spike in natural gas prices in 2021 was relatively small, it was the subsequent rises in 2022 that really pushed prices to extreme levels as stocks became squeezed,” he said.
“The risk is that we see a similar pattern this time. UK imports of LNG are highly seasonal and would naturally start to decline from here as heating demand wanes.
“If LNG supplies from Qatar, which makes up about 25% of global supply, are not resumed by the late summer, when imports start to ramp up again, we will see an even larger price shock.”
Chris Beauchamp, chief market Analyst at IG, said: “Renewed attacks on energy infrastructure and shipping in the Middle East show that the conflict continues to spiral out of control.”
The latest rise followed Israel attacks on Iranian facilities in the country’s section of the South Pars field.
Iran then retaliated with attacks on Qatar’s Ras Laffan complex, the world’s largest liquefied natural gas (LNG) plant.
LNG – which involves cooling gas to ultra low temperatures for shipping – is an important part of the UK’s gas imports. Qatar is the second biggest source of LNG after the US.
Maja Darlington, climate campaigner for Greenpeace UK, said: “The latest spike in gas prices makes Trump’s reckless, chaotic war look more and more like that price shock, and it won’t be the last one we experience if we stay hooked to fossil fuels.
“The UK has the resources to be self-sufficient in energy through renewables. Letting oil and gas stay in the mix means letting foreign wars control our energy bills.”