Household energy bills are expected to rise sharply from July, as the Middle East conflict continues to push up wholesale prices.
Analysts at Cornwall Insight forecast that the next Ofgem price cap could increase average annual bills to £1,929, up from £1,641 under the current cap set before the conflict escalated.
That represents a rise of around £288, or 18%, with much of the increase already being priced in by energy markets.
The surge reflects ongoing disruption to global supply, particularly around the Strait of Hormuz, where infrastructure damage and shipping constraints are keeping wholesale prices elevated.
The projected rise in UK energy bills from July has eased slightly, with the latest estimate now pointing to an increase of £288, down from an earlier forecast of £332.
Analysts say the revision reflects a partial stabilisation in wholesale markets, following a pause in strikes on energy infrastructure. However, the broader picture remains one of significant volatility.
Dr Craig Lowrey of Cornwall Insight warned that energy markets are still experiencing turbulence not seen since 2022, with expectations having shifted sharply. Prior to the conflict, forecasts suggested a relatively stable price cap over the summer — now an 18% increase is expected.
With the next Ofgem price cap decision approaching, continued disruption around the Strait of Hormuz and damage to infrastructure are limiting the scope for any meaningful fall in wholesale prices. As a result, much of the increase is already effectively locked in, making a July rise largely unavoidable.
There is, however, some mitigation in timing. The increase will land during the summer months, when energy demand is typically lower, which should soften the immediate impact on households.
Looking ahead, the bigger concern may be the October price cap, where sustained high wholesale prices could have a more pronounced effect. If that scenario materialises, pressure is likely to grow for government support measures to return to the agenda.
