Energy bills tipped to soar by £200 a year thanks to Iran war chaos | Personal Finance | Finance

Brits could see their energy bills soar by £200 a year, thanks to the war in Iran. Ofgem will publish details today (May 27) about its new price cap for energy.

Analysts have said that a rise of 13% is expected, which could leave households paying £209 a year more, with an average bill of £1,850. The ongoing conflict in the Middle East has cut off oil and gas supplies, with Iran blockading the Strait of Hormuz since March. A fifth of the world’s gas supply passes through the Strait when leaving the Gulf and the country’s military has threatened to set fire to any ship attempting to use the shipping route. This comes after Asda’s income tracker showed that the cost of essentials grew faster than earnings for the third month in a row. The report said: “Given that price growth is expected to pick up significantly later this year, purchasing power is likely to come under further pressure.”

So far, energy prices have been held back by Ofgem due to its caps on tariffs. But this week, the price of a barrel of Brent crude oil went over £74.

The Strait of Hormuz blockade is also preventing fertiliser supplies from passing through. This means that food prices are also set to climb.

In April, inflation eased back to 2.8% but the Bank of England warned it could go past 6% if the conflict in the Middle East continues.

Energy UK, which represents suppliers, said energy bills remained unaffordable for many people, despite repayment plans and arranged breaks from paying bills.

Experts say millions of households have turned down radiators and thermostats, taken shorter showers, blocked draughts, and found ways to keep the heating off in certain rooms to lower bills.

Preparations made during a hot summer to revisit these habits and improve energy efficiency at home could help as prices rise again, they say.