What does the situation in the Middle East mean for my energy bills?
What’s happening in the Middle East?
The US and Israel escalated tensions in the Middle East with strikes on Iran on 28 February. Iran has responded with counter-strikes on targets - including oil refineries and tankers - in multiple countries. It also closed the Strait of Hormuz, which is a key shipping route for oil and gas.
This has led to a spike in oil prices and, because gas prices are linked to oil prices, a spike in wholesale gas prices. Gas has risen to its highest levels in more than three years and, because gas plays a key role in electricity pricing, electricity has increased in price as well.
What does this mean for energy bills?
The conflict began after the April price cap drop was already locked in, so it didn't start affecting UK energy bills until the price cap changed in July. It went up by 13%, which is a significant rise.
Because it costs energy suppliers more to buy energy to supply customers with, they have repriced their fixed deals so they’re more expensive than they were. While there are still deals that offer savings as of July 2026, the savings aren't as high as they were earlier in the summer. The price cap is predicted to stay high for at least the rest of the year, so if you switch, you'll protect yourself from higher bills for the duration of your contract.
It has also affected customers who use heating oil rather than signing up to gas and/or electricity tariffs. Heating oil isn't capped by a price cap, so customers aren't protected from oil price spikes. Oil prices have doubled since the start of the conflict, which has placed a significant financial strain on those due to buy more oil in the near future. However, customers affected by price gouging on heating oil when the conflict started could be eligible for compensation, the CMA has ruled.
What if the war ends? Will energy prices come down?
As of July 2026, peace talks have stalled, which is one of the reasons the price cap is now predicted to increase in October. However, even if the war were to end tomorrow, though, prices wouldn't instantly go back to where they were. They will remain high for at least the rest of the year.
What should you do?
If you're on a fixed energy deal with more than 49 days left on your contract, you can switch if you want to, but you should probably stay put for now.
This is because you'll probably have to pay an exit fee to leave your contract early, and it's unlikely that you'll find a cheaper deal with prices currently high and likely to stay that way for the rest of the year. If you do decide you want to switch, make sure you factor your exit fees into your potential savings.
If you don't want to switch, you can manage your energy usage to save money instead.
If you're on a "standard variable" or "default" energy deal, you should strongly consider switching to a fixed deal.
Your rates are determined by the energy price cap, which is set at £1,663 per year for an average use household paying by Direct Debit from 1 July to 30 September.
Wholesale prices are likely to stay high for the rest of the year, so you should fix to save against the price cap now but also guarantee that your rates will stay at the same level for at least the next 12 months. Remember, though, that the actual amount you spend on energy will depend on the amount of energy you use.
If you're on a fixed energy deal with less than 49 days left on your contract, you can switch to a new fixed deal now - and you should strongly consider doing so, even if it's more expensive than the current deal that's due to end.
When your fixed deal ends, you'll roll on to a standard variable tariff, so your bills could go up by 13% from July and stay at that level or higher for the rest of the year.
You don't have to wait until the end of your contract to switch. If you're inside the final 49 days, you can switch without paying any exit fees.
If you use heating oil, you could be eligible for help if you were affected by price gouging.
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Is there any financial support available?
The government has committed to financially supporting affected households. Local authorities will distribute money to affected households via the Crisis and Resilience Fund from 1 April. England will receive £27 million, Northern Ireland will receive £17 million, Scotland will receive £4.6 million and Wales will receive £3.8 million. Details regarding exactly how the money will be allocated and which households will qualify are to be determined by local authorities, but households may have to apply rather than being automatically eligible.
There may also be more targeted support for the most vulnerable households later in the year when energy use usually increases in the autumn and winter.
Is this the same as the energy crisis in 2021?
While both situations have been triggered by military conflict (Russia-Ukraine and US/Israel-Iran), they're not exactly the same.
While prices are high, they aren't currently forecast to reach the heights they did during the energy crisis. However, with the conflict going on longer than expected, its effects are likely to last longer.