Britons face ‘risk premium’ for energy as US-Israel war on Iran intensifies
Summary
The UK energy regulator Ofgem announced a 4% increase in the energy price cap starting October 1, 2026, due to rising wholesale gas prices caused by the US-Israel conflict with Iran. While about 35% of British households are currently protected by fixed-rate energy plans, most will face higher energy bills this winter, despite a government tax cut aimed at easing the cost impact.Key Facts
- Ofgem raised the energy price cap by 4% from October 1, 2026, because wholesale gas prices went up.
- The rise in gas prices is linked to the war involving the US, Israel, and Iran.
- Around one-third (35%) of UK households have fixed-rate energy plans that protect them temporarily from price increases.
- Most UK households will still pay roughly £60 ($80) more per year in energy costs this winter.
- The UK government cut taxes on electricity bills to help reduce the impact on consumers until the end of the 2027 financial year.
- Experts warn that energy price volatility will continue because the UK imports energy and global conflicts affect supply routes like the Strait of Hormuz.
- About 20% of the world’s oil and liquefied natural gas passes through the Strait of Hormuz, which Iran closed after US-Israel attacks on Tehran, worsening the global energy crisis.
- Ofgem reported an 11% rise in wholesale energy prices over the last three months, increasing pressure on UK energy costs.
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