For the first time, the conflict with Iran is directly affecting British household energy bills. The average dual-fuel tariff has risen by 12 per cent since the escalation began last month, according to data from the energy regulator Ofgem. This surge is driven by a 15 per cent spike in wholesale gas prices, as instability in the Strait of Hormuz disrupts LNG shipments.
The mechanism is a classic supply shock: the strait handles about 20 per cent of the world’s liquefied natural gas (LNG) transits. With insurance premiums for tankers trebling since hostilities began, several cargoes have been rerouted, tightening European supplies. The UK’s gas storage, already at 30 per cent capacity due to a cold March, is now being drawn down faster than usual.
This is not a repeat of the 2022 energy crisis, but it carries its own signature. UK households will see an immediate impact because two-thirds of homes use gas for heating, and gas-fired power plants still generate 40 per cent of our electricity. The price cap, which adjusts quarterly, cannot shield consumers from volatile wholesale markets. The typical household will pay an extra £180 per year from April, Ofgem has projected.
The government’s response has been to consider a windfall tax on energy companies, but that would not address the underlying flux. The UK’s wind power generation has been below average this month, adding to the strain. Furthermore, the conflict’s duration is unknown. If Iran retaliates by closing the strait, Europe could face a gas shortage equivalent to 10 per cent of its winter demand.
This is not a crisis yet, but it is a stress test. The UK’s energy system is resilient in the short term: we have agreements with Norway and the US for LNG, and the new interconnector with France is operational. However, the price signal is clear. Every electron and every therm now carries a geopolitical premium that British households are feeling for the first time.
For context, the UK’s energy poverty rate has already risen from 10 per cent to 18 per cent since 2021. This new shock will push more families into fuel poverty, and the Treasury will need to weigh a targeted support package against inflation risks. The Bank of England will watch this closely, as energy prices feed into core inflation.
In physical terms, what we are witnessing is the collision of a brittle globalised energy system with a regional conflict. The UK is a net importer of energy, and its dependence on international markets has never been more exposed. This is not a cause for panic, but for calm urgency. We must accelerate the energy transition, improve storage capacity, and diversify supply routes. The alternative is to remain a hostage of geopolitics.
For now, British households must brace for higher bills. The coming months will test whether our energy infrastructure can absorb repeated shocks without breaking. The data suggests we are learning the hard way that energy independence is not a luxury but a necessity.
