The vital Strait of Hormuz waterway has been closed once again, sending the price of oil skyrocketing. The latest energy price cap had already gone up 13 per cent in the UK as a result of the Iran-US war.
The next price cap, which will be announced on August 26 and will run from October 1 until December 31, had already been predicted to rise despite the signing of a Memorandum of Understanding (MOU) between Donald Trump and Iran.
But the resumption of strikes means prices are once again set to go up. Money-saving expert Mr Lewis said: “Graphs show what’s likely to happen to energy bills…it ain’t looking good.
“The big changeable factor in the price we pay for home energy is wholesale rates. And this UK natural rate is the main driver of both gas and electricity bills, as gas is involved in electricity generation.
“The impact of the Middle East conflict which started on Feb 28 is clear. It is the prime reason most people’s bills are rising.
“P.S Most of our bill isn’t wholesale rates. It’s policy costs, firms’ costs, distribution costs and VAT. Yet wholesale rates are the biggest varying factor.
“The latest Middle East escalation has seen wholesale price re-spike, and this has a direct impact on the next three-monthly price ap, which starts in October. It’s based on the average wholesale rates from May 19 to August 18, 2026.
“Two weeks ago, it was likely October’s price cap would be similar to July’s. Now, it is very likely we’ll see it materially rise for winter, and that’s on top of July’s 13 per cent rise.
The developments come as a blow to British homes, who were finally seeing prices come down in the wake of the MOU. Fixed prices quickly dropped by five per cent or so in the days that followed its announcement.
However, he stressed that, due to the time lag between the new cap and current events, peace would not automatically result in a drop to the price cap, which around 60 per cent of homes in England, Scotland, and Wales are on due to using a standard variable tariff.
Fixing can offer some relief, but it also comes with more risk. Mr Lewis said: “Fixes: The rate you can fix at moves much more quickly, as it’s tightly linked to wholesale rates. A couple of weeks ago, the cheapest were 15 per cent below the current cap. Now, it’s around 11 per cent.
“For some perspective, the jump due to the Middle East conflict is still nothing close to the impact of the start of the Ukraine conflict. The price cap is currently still roughly 25 per cent less than the rate set for the energy price guarantee (in effect, an emergency cap set during the Ukraine crisis on the maximum price cap customers could be charged).”
