Has the energy shock reached Europe? Britons' energy costs set to soar to a two-year peak

Restrictions on energy supplies caused by the war in the Middle East will cause household energy costs in the UK to reach the highest level in two years in the summer, CNBC writes. The price increase for customers from July 1 to September 30 was announced on Wednesday, Ma. 27, by the British state energy market regulator Ofgem.

The ministry warned that the ceiling on energy prices set by it would rise by 13% starting from July. At the same time, electricity prices will increase by about 5% and gas bills will soar by 24%. The current price cap sets the annual gas and electricity bill for a typical household at £1641 ($2206.94). From July, that figure will rise to £1862, which will be the highest since the beginning of 2024, CNBC notes.

"Today's price movement reflects the ongoing volatility in global energy markets. This means that higher wholesale gas prices, driven by the ongoing conflict in the Middle East, are affecting the price we pay for energy," said Ofgem chief executive Tim Jarvis.

However, despite the current price increases, Britain's energy bills will remain well below the peak level of the 2022 energy crisis, the authority said - at which time the price cap was capped at £2500 a year.

Ofgem's price ceiling limits the amount that can be charged to households in the UK for gas and electricity and is reviewed every three months, CNBC explains. According to the British energy regulator, the price hike will affect those who do not have a fixed rate contract for their utility bills. Such contracts, according to the agency, are currently used by 40% of subscribers across the country - or 22 million households.

Energy analytics agency Cornwall Insight predicts that Britain's gas and electricity price cap will rise to £1899.44 ($2550) in October under the current system. This would represent another increase of 2% from July's figure, CNBC explains.

U.K. Energy Security Minister Ed Miliband said in a post on social networking site X that new data from Ofgem adds to the price pressures facing British households. "The rise in price caps due to a war we did not choose is extremely unwelcome news for families across the country," he wrote, noting that Britain will continue to monitor the situation ahead of winter and "plan for any contingencies." "In the short term, it is crucial to achieve de-escalation of this conflict [in the Middle East] in order to bring down oil and gas prices," Miliband added.

The UK is highly dependent on energy imports, making the country vulnerable to disruptions in global oil and gas supplies and the resulting spikes in oil and gas prices.

Since the outbreak of war in Iran and the virtual closure of the Strait of Hormuz, a critical route for energy supplies from the Gulf, Brent crude oil prices have risen by about 33%, while gas futures have jumped by nearly 50%. Although by now the quotations have declined from their peaks reached during the Iranian crisis, they remain elevated and volatile.

Moreover, Britain is not the only country in Europe that is already feeling the effects of the energy shock caused by the war in the Middle East, CNBC notes. In April, Germany banned gas stations from raising gasoline prices more than once a day, and Eurostat data published last week showed that energy prices in the eurozone jumped 10.8% year-on-year last month.

This article was AI-translated and verified by a human editor