economy
Energy shock starts to bite in Europe: UK household bills set for 'deeply unwelcome' 2-year high
“Ongoing conflict in the Middle East is impacting the price we pay for energy,” the head of the U.K.’s energy regulator said.
TL;DR
- U.K. household energy costs will hit a two-year high this summer due to supply constraints from the Iran war.
- Ofgem announced a 13% rise in its energy price cap starting in July, with gas bills increasing by 24% and electricity by 5%.
- Higher wholesale gas prices, driven by Middle East conflict, are impacting U.K. energy bills.
- The typical annual household bill will rise to £1,862 from July, the highest since early 2024.
- Britons have reduced energy usage by 7% for electricity and 17% for gas since the last price cap review.
- 40% of energy accounts are on fixed-term contracts and will be protected from the July price rise.
- Ofgem is expected to increase the price cap again in October, with forecasts suggesting a further rise.
- The U.K.'s reliance on imported energy makes it vulnerable to global supply bottlenecks.
- Brent crude oil prices have surged 33.5% and Dutch TTF gas futures have jumped nearly 50% since the closure of the Strait of Hormuz.
- Despite the increase, bills will remain below the peak of the 2022 energy crisis.
- U.K. Energy Security Secretary Ed Miliband criticized the price cap rise, linking it to the conflict and urging de-escalation.
- Germany and the euro zone are also experiencing the impact of energy price shocks.