Your energy bill is about to drop in April. The Ofgem price cap is falling to £1,641 a year for a typical household paying by direct debit, down from £1,758 the quarter before. That is roughly £10 a month back in your pocket.
However, the Iran war energy bills picture is already shifting. The April relief may not last long, and what happens next depends on a conflict most people in the UK have limited control over.
Why the Iran War Is Pushing Up Energy Prices in the UK
On 28 February 2026, the United States and Israel launched joint airstrikes on Iran. Iran retaliated by closing the Strait of Hormuz, the narrow stretch of water through which around 20% of the world’s crude oil passes every single day.
On top of that, Iranian drones targeted Qatar’s Ras Laffan gas facility. Qatar halted all production immediately. Ras Laffan produces close to a fifth of the world’s liquefied natural gas. When it went offline, European wholesale gas prices nearly doubled within days.
What Has Already Gone Up on Your Bills
Petrol Prices Are Already Higher
The fastest pass-through from the conflict has been at the pump. Brent crude surged 10 to 13% in the immediate aftermath of the strikes. The Bank of England governor confirmed in March that drivers are already paying more, and that energy bills will follow if the situation continues.
Food Prices Face Pressure Too
This one gets less attention. Fertiliser production relies heavily on gas, and a significant proportion of fertiliser supply routes pass through the Strait of Hormuz. Food prices were already rising faster than general inflation before the conflict. Any sustained disruption adds further pressure on top of that.
What Is Coming on Your Energy Bill
The Ofgem price cap is reviewed every three months. The next announcement covers July to September 2026 and is due on 27 May 2026.
Cornwall Insight, one of the UK’s most respected energy forecasters, is already predicting the cap could rise to £1,801 by July. That would be a £160 swing in three months, wiping out the April saving and pushing bills above where they were in January.
If the conflict drags on through winter and the Strait of Hormuz remains restricted, further rises into the October cap are a real possibility.
How Bad Could UK Inflation Get
The OBR Base Case: 3% Inflation by End of 2026
The Office for Budget Responsibility has warned that a sustained energy price spike could push UK inflation to around 3% by the end of the year. Before the conflict, it was tracking toward the Bank of England’s 2% target.
The Worst Case Scenario: Up to 5% Inflation
Bloomberg reported estimates from ING and RSM UK suggesting inflation could hit 5% if current energy prices are maintained throughout the year. That would be more than double the Bank of England’s target.
For context, the Russia and Ukraine conflict in 2022 sent UK inflation to a peak of over 11%, and the government spent £78 billion on energy subsidies. Analysts stress the current situation is not on that scale yet. Wholesale gas prices have risen sharply but nowhere near the fivefold spike seen after the Ukraine invasion. However, the direction of travel is the same.
Why the Bank of England Is Holding Interest Rates
The Bank of England held its base rate at 3.75% at its March 2026 meeting, citing the inflationary pressure from the conflict. Rate cuts that were expected earlier in the year are now off the table.
The British Chambers of Commerce now forecasts no rate cuts at all in 2026. It has also revised unemployment expectations up to 5.5% and cut export growth forecasts to 0.7% for the year.
However, there is an upside here for savers. Higher for longer interest rates means savings accounts and cash ISAs continue to pay competitive returns. Top easy access accounts are currently paying around 4.5% to 4.75% AER. If you have cash sitting in a low rate account earning next to nothing, this environment rewards switching.
How to Protect Yourself From Rising Energy Bills Right Now
Check Whether You Are on a Fixed Energy Tariff
If you are on a standard variable tariff, your bills move with the Ofgem cap every quarter. A fixed tariff locks in your unit rate for its duration, regardless of what wholesale gas prices do next.
With the July cap announcement due on 27 May, comparing fixed deals now gives you time to act before prices are reset upward. If a fix comes in at or below the current £1,641 level, it provides certainty that a variable tariff cannot.
Reduce Your Gas Usage Before Bills Rise Again
Around three quarters of UK homes use gas for heating, far higher than most developed economies. That dependence is precisely why energy shocks hit British households harder than most of Europe.
Turning your thermostat down by one degree cuts heating costs by around 10%. Draught proofing windows and doors is cheap and delivers immediate savings. These are not glamorous fixes, but at current unit rates they compound quickly.
Move Your Savings Somewhere That Beats Inflation
Inflation running at 3% or above quietly erodes the value of cash sitting in low rate accounts. The personal savings allowance lets basic rate taxpayers earn £1,000 in interest tax free each year. A cash ISA protects you beyond that, with up to £20,000 a year sheltered from tax entirely.
With ISA season open now and competitive rates available from challenger banks and digital providers, shifting cash into a top paying cash ISA is one of the more straightforward ways to offset the cost of living squeeze.
What UK Households Should Do Before July 2026
The April price drop was welcome. But the data points one way right now. Gas markets are up, forecasters are revising bills higher, and the Bank of England has shelved rate cuts because of it. The households that come out of this in the best shape will be the ones who fixed their energy tariff before the 27 May announcement, trimmed their gas usage before summer, and moved idle cash into a savings account that is actually working. The window to do all three is still open. It will not stay open for long.
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