Energy bills to jump by £209 from July as households continue to be hit by fallout of Iran war

British households are facing another major increase in energy bills after analysts forecast that the Ofgem price cap will rise by £209 a year from July.

The cap is now expected to climb 13 per cent, from the current annual level of £1,641 to £1,850, according to energy consultancy firm Cornwall Insight.

That figure is higher than last month’s forecast, when analysts predicted a £196 rise.

Ofgem, which will confirm the new cap on May 27, puts limits on what suppliers can charge per unit of gas and electricity and impacts around two‑thirds of homes not on fixed‑term tariffs.

The sharp rise in wholesale prices has been driven by conflict involving Iran and wider instability across the Middle East.

Prices surged in February and March after US and Israeli missile strikes on Iran, followed by Iranian retaliation that disrupted energy infrastructure across the Gulf.

The closure of the Strait of Hormuz, through which around 20 per cent of global oil and gas shipments pass, added further pressure.

Cornwall Insight said wholesale prices remained elevated throughout the monitoring period, even after a temporary ceasefire eased some market tension.

This, it said, is the main reason the predicted July cap remains more than £200 above current levels.

The April cap had previously fallen by £117 after Chancellor Rachel Reeves removed green levies from household bills. Analysts said the escalation in the Middle East has now effectively wiped out those savings.

Craig Lowrey, principal consultant at Cornwall Insight, warned that the bigger challenge may come later in the year.

“A summer rise will be painful for households but the bigger concern is October, when household demand traditionally picks up,” he said.

“If the cap stays at a similar level as July, that is when the Government will need to think seriously about targeted support for the most vulnerable.”

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The consultancy said a return to April’s lower prices appears unlikely even if tensions ease, with damage to refineries and pipelines expected to disrupt supplies for some time.

There may still be opportunities for households to avoid the full impact by switching to fixed deals before July.

Uswitch director of regulation Richard Neudegg said: “The expected 13 per cent rise to energy bills is completely avoidable. A number of fixed tariffs currently undercut the predicted price cap, some by over £200 for the average home.”

According to Uswitch, 26 fixed tariffs are currently cheaper than the predicted July cap.

Fixed‑rate deals typically require a 12‑month commitment, meaning households could miss out if prices fall — though analysts say significant reductions do not appear likely in the near term.