How the Iran conflict is affecting UK energy prices

Last updated: 5 November 2026·Written by Anthony Bushen-Garvie· 6 min

Your energy supplier doesn't really decide what you pay. Foreign policy does.

What's happened in the Strait of Hormuz

The Strait of Hormuz is a narrow stretch of water between Iran and Oman. About a fifth of the world's oil passes through it, along with a large share of the world's liquefied natural gas from Qatar.

Since US and Israeli strikes on Iran on 28 February 2026, Iran has largely blocked it. In the weeks that followed, tanker traffic carrying crude fell by around 95% and LNG shipments by around 99%. A ceasefire in April and a US-Iran agreement in June each reopened it briefly. Neither held. The truce broke down on 8 July after Iran struck commercial ships.

Why a strait in the Gulf reaches your bill

Britain buys gas from the same international market as the rest of Europe. When supply through Hormuz stopped, buyers competed for what was left. European gas prices rose about 50% in the first week, from about €31 to €45 per megawatt hour, and ended March up 60% to 70%. That was the biggest monthly rise since September 2021.

It doesn't stop at gas. Gas power stations often set the wholesale price of electricity in Britain, so when gas gets dearer, so does electricity. Ofgem then builds those wholesale costs into the price cap, using prices from a fixed window a few months before each cap starts.

What it's done to the price cap

Ofgem put the cap up 13% in July, then again in October. Your supplier didn't choose that. A standoff thousands of miles away did.

Dual fuel, direct debit. *From 1 July 2026 Ofgem lowered its typical-use figures, so the cap fell to £1,663 on the new basis. On the old basis it would have been about £1,862, which is the 13% rise. The January figures are forecasts until Ofgem announces them.

In July, gas rose far faster than electricity: about 24% against 5%. Both went up, and neither had anything to do with how well your supplier runs its business.

Timeline: from Ukraine to Hormuz

If this sounds familiar, it should. The same thing happened after Russia invaded Ukraine in 2022. Filter the timeline to compare the two.

What you can control

None of us can control what happens in the Gulf, or in Ukraine. But there is one thing you can do. The power from panels on your roof doesn't come through a strait or a pipeline.

• Solar cuts what you buy. Every kWh your panels supply is one you don't buy at whatever the cap says that quarter.
• A battery stretches it into the evening. Store daytime solar and use it after dark, when you'd otherwise be buying from the grid.
• A smart tariff covers the rest. Fill the battery overnight at a cheap rate when the next day looks dull. Our guide to EV and solar tariffs compares the options.

It won't make you immune to the economic shockwave of war. Solar covers electricity, not gas heating, and you still pay standing charges. But it will ringfence how much of your bill a war can touch.

A real Geko install: Pete and Sarah in Somerset have 16 panels and a 12 kWh battery, and save £3,324 a year on their bills. That's their individual result. Solar and battery installs completed by 31 March 2027 also carry 0% VAT.

What happens next

Ofgem announces the next price cap on 25 November, for January to March 2027. Cornwall Insight forecasts a 16% rise, to about £1,999 a year. Other forecasts go as high as £2,185, a rise of about 27%. Wholesale prices hit a four-year high in early September, inside the window Ofgem uses for January, so analysts expect most of that rise to be locked in.

We'll break it down here when it lands.

Iran conflict and UK energy prices: FAQs

Why are UK energy prices going up in 2026?

Mainly because of the conflict with Iran. Since 28 February 2026 the Strait of Hormuz has been largely blocked, which pushed up oil and gas prices across Europe. The UK buys from the same wholesale market, and Ofgem's price cap follows wholesale costs.

Does the Iran conflict affect UK electricity prices as well as gas?

Yes. Gas power stations often set the wholesale price of electricity in Britain, so dearer gas means dearer electricity too. In July's cap, gas rose much faster than electricity, but both went up.

When is the next energy price cap announced?

Ofgem is due to announce the cap for January to March 2027 on 25 November 2026.

How much will the price cap rise in January 2027?

Forecasts range from about 16% (Cornwall Insight, around £1,999 a year) to 27% (around £2,185) for a typical household. The figure isn't confirmed until Ofgem announces it.

Can solar panels protect me from energy price rises?

They won't make you immune, but they reduce how much electricity you buy from the grid. Power from your own roof doesn't depend on a shipping lane or a pipeline, so less of your bill moves when wholesale prices do. A battery lets you use more of that solar in the evening.

Figures as reported up to 5 November 2026 and may change. Price cap figures are Ofgem's for a typical dual-fuel household paying by direct debit. Forecasts are not confirmed until Ofgem announces them.