Energy prices affected by Middle East crisis: how will it impact your bills?
Large energy providers, including British Gas, Eon Next and Ovo Energy, are only offering limited switching opportunities to new customers as conflict escalates in the Middle East.
It comes as early predictions suggest that variable energy prices could rise 10% this summer as a result of volatile global gas prices.
Just two weeks ago, prices were expected to stabilise for the rest of the year following energy regulator Ofgem’s recent price cap cut, which will be in effect from 1 April.
But the new forecast from industry consultancy Cornwall Insight predicts an increase of £160 a year for the average typical energy bill, for those on variable, out-of-contract rates. This takes into account the escalating conflict between the United States, Israel and Iran, and its impact on Gulf states that are critical to the global energy market.
Previous advice for households was that it's worth switching to a fixed deal, as the energy market has consistently offered fixed tariffs cheaper than the price-capped rates.
That advice still stands. However, with current price volatility, energy firms are rapidly withdrawing competitive tariffs from sale.
There are still a few options available. Scroll down for more information.
Heating oil prices are also rising. Keep reading for tips on what to do.
Read more: how to get the best energy deal
Energy bill changes in April
All energy bills will still go down from 1 April as planned. The new predictions are for the price cap from 1 July.
If you have a variable tariff:
A typical household* on a variable tariff will pay £1,641 a year from April, a drop of £117 a year compared with January-March. That’s an average monthly saving of £9.75.
The price cap doesn’t limit your total bills. It caps the cost of each unit of gas and electricity you use. If your home uses more than average, you’ll pay more. If your home uses less, you’ll pay less.
Read more: the energy price cap will drop by 7% in April 2026
If you have a fixed tariff:
Fixed-tariff customers will also see bills cut from April. That’s because the costs of most of two government schemes (the Energy Companies Obligation and Renewables Obligation) will be removed from all customers’ bills.
The government says this change could save a typical household around £150 a year. Look out for communication from your energy supplier confirming how your rates will change and how much you’ll save.
Besides this, your fixed tariff's rates won't change until the end of your contract.
See more: all households to see energy bills cut from 1 April
Should I fix an energy tariff now?
We don’t know by how much and for how long a spike in global gas prices will impact energy rates, and it's important to note that there's time for a lot to change.
The energy regulator, Ofgem, looks at average wholesale prices over three months in order to set its quarterly price cap. Its next review is due at the end of May, and will take effect on 1 July.
But with UK gas prices having doubled since the start of the conflict in the Middle East, it’s not a good time to be on a variable tariff, or a tariff tracking the price cap.
If you're not already on a fixed tariff, you should compare prices and see what your best option is.
However, try not to panic and fix a deal that's too expensive. As of 10 March, energy firms are rapidly changing the prices of their fixed deals and many tariffs are no longer available.
British Gas, Eon Next, Ovo Energy and So Energy all have messages on their websites stating that they are offering limited tariffs at the moment. Octopus Energy has introduced a £75 exit fee per fuel on its new deals, as a result of current price volatility.
- On 10 March, Outfox Energy's 12-month fixed tariff (Fix'd Dual Mar26 12M v4.0) is available, at £1,656/year for the typical household, with exit fees of £75 per fuel. Customers signing up to this tariff will also receive the unit rate reduction from 1 April 2026, in line with government policy changes.
- On 9 March, Eon Next's 12-month fixed tariff (Next Fixed 12m v116) is available at £1,765/year for the typical household, with exit fees of £50 per fuel. When fixed rates decrease on 1 April, this will come closely in line with the April price cap.
- On 5 March, EDF launched a longer 2-year fixed tariff (Simply Fixed 2Yr Mar28v3) at £1,772/year for the typical household, with exit fees of £75 per fuel. This will drop to £1,641/year from 1 April, to account for the government policy changes.
With such a volatile market, deals are likely to change quickly. Bear in mind that similar offers may appear from other providers, so do check the market to run a comparison before making a decision.
If you manage to find a fixed deal, check that it's similar to or cheaper than the April price cap. Things are changing rapidly, so we don't know how long the price spike will continue, nor when cheaper fixed deals might return.
When comparing fixed prices, remember that all fixed rates will decrease from 1 April to take into account the cut in government scheme costs, so make sure you’re comparing like for like.
Use our free, independent energy comparison service to compare gas and electricity prices across the whole energy market and find the best provider for you.
Heating oil prices rise
Oil-heated households are also seeing sudden price increases across the UK and Ireland.
Heating oil is kerosene-based, like jet fuel. The wholesale price of jet fuel has more than doubled since the recent Middle East conflict began, according to the UK & Ireland Fuel Distributors Association (UKIFDA), with prices at a three-and-a-half year peak.
Volatile prices make it difficult for distributors to predict the cost of fuel they purchase. Some are therefore scheduling orders from households in advance, but confirming prices closer to the delivery date. Not knowing what you'll pay makes it tricky to budget.
Some customers are also facing longer waits than usual when contacting their local distributor.
If your tank is running low, the UKIFDA advises to order as normal. Otherwise:
- Talk to your local distributors and check online platforms
- If you can delay purchasing, consider waiting
- Ask about smaller deliveries, but be aware that more frequent deliveries may increase your overall cost.
Why is the Iran conflict affecting UK energy prices?
The wholesale global price of gas is currently extremely volatile. The wholesale gas price is what energy firms pay for the energy we use and is passed on to customers. It's a big driver of UK electricity prices too.
Oil and gas infrastructure across Gulf states has been damaged, and Iran has warned ships not to use the Strait of Hormuz, a vital shipping route for about 20% of global oil and gas.
Most of the UK’s Liquefied Natural Gas (LNG) comes from the US and only a small proportion is imported from Qatar. However, gas storage levels in the EU are low after winter and there may be increased competition in the global LNG market from those which rely more on LNG from the Middle East.
We don’t know by how much and for how long instability in the Middle East will impact global gas prices.
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.'
* Using a medium amount of energy, defined by Ofgem as 11,500kWh gas and 2,700kWh electricity per year.
