British households could see their annual energy bills rise by as much as £250 within months, as escalating conflict in the Middle East pushes up global oil and gas prices.
Industry body Energy UK has warned that the next revision of the energy price cap, due at the end of June and taking effect from July, is likely to reflect sharp increases in wholesale costs driven by the ongoing Iran related conflict.
Prices surge as conflict disrupts supply
Global energy markets have reacted strongly to recent attacks on infrastructure across the Middle East. Oil prices have risen by more than 40 per cent since the start of the conflict, while gas prices have climbed over 60 per cent.
In recent days, further disruption has added to market volatility. Operations at the Shah gas field in Abu Dhabi remain suspended after a strike earlier this week, and a separate attack triggered a fire at an oil storage facility in Fujairah, on the UAE’s eastern coast.
These developments have helped push oil prices towards the $100 per barrel mark, increasing costs for suppliers and, ultimately, consumers.
Impact on household bills
Energy UK said supplier projections indicate that households could face an increase of up to £250 a year when the new cap is introduced. While the precise scale of the rise remains uncertain, the organisation said it was prudent to prepare for higher costs.
Dhara Vyas, chief executive of Energy UK, said it was “too early to tell” the full impact of the conflict, but stressed that planning for targeted support was essential.
She said any intervention should be “cost effective and directed to help those who most need it”.
Calls for targeted government support
The industry body has urged the Government to act quickly to shield vulnerable households, particularly those on low and lower middle incomes. It argued that a targeted support package would cost significantly less than previous interventions.
According to Energy UK, a focused scheme could cost the Treasury around £12.5 billion, compared with the estimated £35 billion spent on universal support measures following the energy shock triggered by the Russian invasion of Ukraine.
Vyas also highlighted growing concerns about household energy debt, which remains elevated despite some easing in prices over the past year.
“Energy bills remain higher than they were before the invasion of Ukraine, and there is growing concern about record amounts of customer debt,” she said.
“Prioritising efforts to identify these customers is crucial for any potential emergency response and will also mean that we can ensure they are supported in the long term.”
Wider economic concerns
The latest warning has also intensified debate over the UK’s economic resilience to external shocks. Rising energy costs have historically placed pressure on government finances, and analysts say the current situation exposes underlying vulnerabilities.
With oil prices remaining elevated and geopolitical tensions ongoing, policymakers face renewed pressure to balance fiscal constraints with the need to protect households from another surge in living costs.
The Government has yet to set out any new support measures ahead of the upcoming price cap adjustment.
