UK households face a significant 10% increase in their energy bills from July, experts have warned, attributing the rise to soaring wholesale gas prices driven by the escalating conflict in the Middle East.
Analysts at Cornwall Insight predict Ofgem’s price cap for the third quarter of the year (July to September) could reach £1,801 annually for a typical dual fuel household. This represents a substantial £160 hike, or 10 per cent, compared to the cap announced for April.
The consultancy described the projected rise as a "cause for concern", cautioning that any increase in gas prices would inevitably translate into higher electricity costs for consumers.
However, Cornwall Insight also noted that the ultimate price cap figure will be determined by average wholesale prices over a three-month period. This means the final outcome hinges on how long gas prices remain elevated and the duration of market volatility.
The surge in wholesale markets is directly linked to heightened regional tensions in the Middle East. Recent events, including US and Israeli missile strikes on Iran, followed by retaliatory attacks from Iran, have reportedly damaged critical oil and gas infrastructure across key Gulf states, disrupting supply and driving up prices.
QatarEnergy has been forced to pause production of liquified natural gas (LNG) at several sites hit during Iran’s response.
Iran has also warned ships not to use the Strait of Hormuz, a vital shipping route for about 20% of global oil and gas, adding further pressure to global energy markets.
Although Europe and the UK do not rely heavily on Qatari LNG, reduced supply will affect major Asian importers such as Japan, South Korea and Pakistan, meaning competition in the global market is expected to intensify, pushing prices up.
The quarterly energy price cap will fall by 6.6% from 1 April 2026.
— Ofgem (@ofgem) February 25, 2026
This will be a decrease of around £10 per month for the average household.
This is a cap on energy unit price plus standing charge, not a cap on total bills.
More ⬇️ https://t.co/ZzFRdpR2Qa pic.twitter.com/RWUZR1oYEh
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “Looking at the April cap, the role of wholesale prices as a determinant of bills had eased given the impacts of policy costs and network costs.
“However, 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, and what happens in the energy markets over the next three months will be the key factor, rather than this spike alone.
“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 to protect households from future price shocks.”
