You might have been following the news about the US and Israel launching strikes on Iran at the end of February. The impact on Iran energy bills across the UK is already being felt, and if you have not started paying attention, now is a good time to start. Here is the straightforward version of what is happening, why it matters to your wallet, and what you can actually do about it
What Happened and Why It Matters
On 28 February 2026, the United States and Israel launched joint military strikes on Iran. Iran retaliated fast, hitting targets across the Gulf region including in Qatar, the UAE, Bahrain, and Iraq. The crisis intensified on 2 March when QatarEnergy halted liquefied natural gas production at its facilities in Ras Laffan Industrial City and Mesaieed Industrial City, following Iranian drone strikes on both sites. Qatar then officially declared force majeure on 4 March, a legal clause that effectively allowed them to walk away from contracted gas deliveries without financial penalty, on the grounds that the situation was completely beyond their control.
The situation that followed spooked energy markets worldwide. Today’s complete halt of oil flows through the Strait of Hormuz is, according to researchers at Rystad Energy, unprecedented in the history of the waterway. That is not a phrase analysts use lightly.
So why does a waterway thousands of miles away affect what you pay to heat your home in Bolton or Bristol? Because of one number: 20
Roughly 20 million barrels of oil per day pass through the Strait of Hormuz, representing about a fifth of global consumption, along with the equivalent of around 20% of global LNG trade. When that route shuts down, there is no quick fix. Alternative pipelines simply cannot make up the difference at scale. The global oil and gas market felt the shock within hours.
How Bad Has the Price Spike Actually Been?
Significant. Oil prices briefly eclipsed $100 a barrel for the first time since Russia’s invasion of Ukraine, trading near $120 a barrel at one point before easing back below $100.
For context, Brent crude was sitting around $73 a barrel before the strikes began. In a matter of days, traders were staring at prices that had moved by 30% to 50%. That kind of volatility does not stay confined to commodity markets. It bleeds into everything.
UK gas prices for April 2026 delivery rose 52%, while winter 2026 gas contracts climbed 25%. Day Ahead Power prices increased 30%. European gas markets as a whole surged more than 20% in a single morning. The UK does not import large volumes directly from the Gulf, but that is largely irrelevant.
Gas and LNG are traded on global markets. When a major supply route shuts down, prices move everywhere. European gas is benchmarked against the Dutch TTF, and UK wholesale gas and electricity prices closely track European benchmarks. Because around 40% of the UK’s electricity is generated from gas, gas price spikes feed directly into power prices as well.
What Does This Mean for Your Bills?
The answer here depends on timing, and there is some good news buried in the bad.
Your energy prices are protected by the Ofgem price cap, which was already set for April to June before the conflict began. The average household will actually see a reduction of around £117 on their bills compared to January prices, thanks to the government cutting the Energy Company Obligation levy. So in the short term, you are insulated.
The problem is what happens next. The cap is adjusted on a quarterly basis, which means the Iran conflict will be reflected in whatever cap Ofgem sets for July.
Analysts from Cornwall Insight and Deutsche Bank have warned that if oil stays above $100 a barrel, the July to September cap could rise by anywhere from £160 to £500, potentially pushing the typical annual bill up to between £2,000 and £2,500. That is a significant reversal after a period where bills had been slowly coming down.
The OBR’s David Miles told the Treasury Committee that oil prices are currently around 20% higher than before the conflict, and gas prices are up about 50%. He estimated that if prices remain at these levels, UK consumer prices could end the year approximately 1% higher overall. That extra inflation would hit households that are only just starting to feel relief from the cost of living squeeze of the past few years.
It Is Not Just Your Energy Bill
The impact fans out well beyond your gas and electricity meter.
Petrol. Petrol and diesel prices have already risen by 5p to 9p per litre in a single week. The RAC has warned that if Brent Crude holds at current levels, prices at the pump could reach 150p per litre within weeks. Analysis from the Energy and Climate Intelligence Unit suggests that a sustained disruption could push petrol prices to at least £1.90 a litre, comparable to the peak seen after Russia invaded Ukraine in 2022.
Food. Higher energy and fuel costs work their way into food prices through every stage of the supply chain. Fertiliser production, manufacturing, refrigeration, and logistics all run on energy. The ongoing war in Ukraine demonstrated just how interconnected food and energy markets are, and the same logic applies here.
Interest rates. This is a less obvious one but potentially a big deal for anyone with a mortgage or hoping for one. Rising energy costs could force the Bank of England to hold rates higher for longer, dashing hopes of near term rate cuts. If you were banking on your mortgage deal getting cheaper later this year, that may now be a less certain prospect.
Flights. Jet fuel prices hit record highs for three consecutive days in early March. Airlines including Wizz Air have already flagged a hit to profits, with higher costs likely to filter through to ticket prices before long.
What Can You Do Right Now?
A few practical moves worth considering while there is still time.
Fix your energy tariff. If you are on a standard variable tariff, you are exposed to whatever the July price cap ends up being. Fixed tariffs from major suppliers have already risen by around £200 in recent days, and the window for locking in before prices move further may be closing fast. Compare deals now through a comparison site and do not wait until the summer.
Check your direct debits. Many energy suppliers will automatically adjust direct debits when the cap changes. Make sure yours reflects your actual usage so you are not underpaying and landing a big catch up bill, or overpaying and essentially giving your supplier a free loan.
Think about petrol costs. If you drive regularly, consider whether the timing of fill ups matters for your budget. Prices are moving quickly and tend to track wholesale oil costs with a short lag. Apps like Petrol Map or GasBuddy can show the cheapest stations near you.
Do not panic, but do stay informed. The situation in Iran is still developing. Some analysts believe that if the conflict ends within weeks, oil prices could retreat from current highs, though a return to the £60 to £70 per barrel range seen earlier this year is considered unlikely even in that scenario. The longer it drags on, the more entrenched higher prices become.
The Bigger Picture
What the Iran war has reminded everyone, fairly brutally, is how exposed the UK still is to events happening thousands of miles away. We import fossil fuels traded on volatile global markets, and when those markets move, our bills move with them.
The situation has prompted comparisons to Russia’s invasion of Ukraine, which had a long and painful impact on the UK cost of living. Prime Minister Keir Starmer has warned that the longer the Iran conflict continues, the more likely there will be a tangible economic impact on households and businesses.
For now, the best thing you can do is make informed decisions about your energy tariff, keep an eye on your fuel costs, and not assume that bills will quietly stay where they are. The July price cap review will be the moment of truth. By then, either the Strait of Hormuz will have reopened and things will have calmed down, or we could be looking at another bruising autumn for household finances.
Either way, it pays to be prepared.
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