In an escalation that threatens to reshape global energy markets, Iran has warned it may disrupt oil and gas supplies through the Strait of Hormuz. The statement, issued by the Iranian Revolutionary Guard Corps, comes after renewed tensions with the West over nuclear negotiations. For UK households, the immediate consequence is a forecast increase in energy bills, with analysts projecting a rise of 12-15% on average from next quarter.
The Strait of Hormuz is a crucial chokepoint: about 20% of the world's oil and 25% of liquefied natural gas pass through its narrow waters. A disruption, even a temporary one, would send shockwaves through already tight markets. This is not a hypothetical exercise. In 2019, after Iran seized tankers, oil prices spiked 15% in a week. Today, with global gas storage at multi-year lows and winter approaching, the margin for error is razor thin.
For the UK, which now imports over 50% of its gas (mostly as LNG), the exposure is direct. Wholesale prices have already risen 8% in the past 48 hours, and the energy regulator Ofgem is likely to adjust the price cap upward in January. The irony is sharp: Britain's push to decarbonise has made it more reliant on imported gas, while domestic wind and nuclear have not filled the gap. A crisis in the Strait thus hits harder than it would have a decade ago.
The mechanism is straightforward: hedge funds and traders react to risk premia. The moment Iran's threat was credible, futures contracts for Brent crude jumped from $82 to $89 per barrel. For gasoline and diesel at the pump, that means an extra 5-7 pence per litre. For homes heating with gas, the typical annual bill could rise by 150-200 pounds. This is not speculation; it is the physics of supply and demand.
Ofgem's CEO has stated they are “monitoring the situation closely” but offered no intervention. The government's energy taskforce, convened in September, is reportedly modelling scenarios of 40% price surges. Meanwhile, there is no spare capacity: OPEC+ has been cutting production, and US output has plateaued. Iran knows it holds a strategic card.
What does this mean for energy transition? Higher fossil fuel prices historically accelerate adoption of renewables, but only if governments maintain incentives. In the UK, the windfall tax on oil and gas producers has already deterred domestic investment. A price spike could lead to calls for drilling in the North Sea or fracking in Lancashire. The biosphere does not care about geopolitics; it responds only to cumulative emissions.
The most likely outcome is a negotiated stand-down, but the window is narrowing. Iran's nuclear programme is weeks away from weapons-grade enrichment, according to IAEA reports. The US under its next administration will face a choice: a new deal or a preventive strike. Both have energy consequences.
For the British public, the message is: brace for higher bills. The era of cheap energy is over, replaced by a complex dance of geopolitics, climate policy, and brittle infrastructure. The calm urgency of this moment is that our dependence on fossil fuels makes us vulnerable to every tremor in the Middle East. The only permanent solution is a grid so robust and renewable that no single chokepoint can break it. But that grid is years away. Tonight, the price of gas is set in Tehran.
