UK energy price cap to jump 13% in July as Middle East conflict drives wholesale gas costs higher
British households will see their energy bills rise by an average of £221 a year from July after regulator Ofgem lifted the price cap by 13%, citing soaring wholesale gas prices driven by the conflict in the Middle East.
The price cap increase
Ofgem announced on 27 May that the energy price cap for a typical dual-fuel household paying by direct debit will rise to £1,862 per year from 1 July, up from £1,641 in the April–June period. The 13% increase translates to roughly £18 more per month for the average household. Gas bills are set to rise by 24%, while electricity bills will increase by about 5%. The new cap runs until 30 September.
Today's price change reflects continued volatility in global energy markets. This means higher wholesale gas prices, driven by ongoing conflict in the Middle East, is impacting the price we pay for energy.
What is driving the rise
Ofgem and multiple government figures attributed the increase directly to higher wholesale gas prices caused by the war in Iran and the blockage of the Strait of Hormuz. The strait carries roughly a fifth of the world's oil and gas, and its disruption has fed through to global energy markets. Because the price cap is set quarterly based on wholesale costs, the impact is only now reaching household bills.
The rise in the price cap because of a war we did not choose is deeply unwelcome news for households across the country.
Government measures and their limits
The April–June price cap was the first to reflect Chancellor Rachel Reeves's pledge to cut £150 from average bills by shifting 75% of Renewables Obligation costs from bills into general taxation and scrapping the Energy Company Obligation scheme. However, the July increase effectively cancels out that relief. Energy Secretary Ed Miliband said the government would monitor the situation ahead of winter and plan for all contingencies, while stressing the need to de-escalate the Middle East conflict to bring down oil and gas prices.
Outlook for the rest of 2026
Early forecasts from analysts Cornwall Insight suggest the price cap could rise further to £1,899 per year for the October–December period — a 2% increase on July's level — just as heating demand picks up. Cornwall Insight cautioned that the forecast remains uncertain and could shift with wholesale market conditions, but warned that "the direction of travel is being shaped by several unknowns that are unlikely to be resolved quickly."
- Price cap set at £1,641 for April–June, reflecting £150 government cut to household bills
- Price cap rises 13% to £1,862 for July–September, driven by Middle East conflict
- Cornwall Insight forecasts cap rising to £1,899 for October–December
What households can do
Ofgem CEO Tim Jarvis urged consumers to explore fixed tariffs, change payment methods, or take advantage of off-peak electricity deals available to smart meter customers. Around 40% of accounts — 22 million — are on fixed tariffs and will be unaffected by this rise. Energy UK's Ned Hammond said the government must focus on targeting support to the most vulnerable customers ahead of winter.
A rise of this scale will already be a concern for millions of customers but such worries will be magnified if bills remain at this level — or higher — over the winter months.
