What happened, and when
The UK entered 2026 in a relatively benign energy market. The April price cap had eased to £1,641, its lowest in nearly three years. Households hoped the improvement would hold through summer.
That period of calm proved short-lived, as the Middle East conflict rewrote the outlook through one mechanism: the Strait of Hormuz.
Why the UK is exposed: Hormuz closure, UK impact
For the UK, LNG carries greater weight than the headline oil-route framing implies. Qatar's Ras Laffan ranks among the world's foremost LNG export terminals. Hormuz remains its sole maritime route to global markets.
UK LNG imports from Qatar formed part of the 12-14% of Europe's gas Qatar supplied before the closure. The US Energy Information Administration estimates the closure displaced over 10 billion cubic feet of LNG daily. That represents around 20% of world LNG trade.
See our Middle East gas shock explainer for wider context on how Gulf tensions feed into UK energy bills.
The UK depends heavily on LNG to balance supply, whereas Germany and Central Europe retain extensive pipeline infrastructure. Any LNG disruption to UK energy supply leaves few alternatives. The Dutch TTF gas benchmark sets European pricing and reacts sharply to any shock.
UK households and businesses absorb European wholesale gas prices, even for North Sea production. UK gas prices in the Iran war climbed roughly 75%. Dutch TTF nearly doubled past €60/MWh.
What it has done to UK households
Ofgem fixes unit rates for each quarter, cushioning the direct hit. April-June standard variable customers continue paying £1,641 a year, despite elevated wholesale prices.
The Iran war propagates through to UK bills via two indirect channels: inflation and the next price cap.
UK CPI April 2026 hit 3.3%, driven by UK petrol prices that tracked oil almost in real time. Energy companies' hedging passed the remaining wholesale costs through with a lag.
The Bank of England flagged the UK as among the worst-affected major economies. UK inflation in 2026 could top 5% past 30 June, with knock-on effects on interest rates.
Ofgem's July-September assessment window runs from February to mid-May 2026. The Iran-driven price spike sits squarely inside it. Cornwall Insight forecasts now place the July 2026 energy price cap at £1,866-£1,929, up 14-18% on April.
The UK imports little Gulf oil directly, drawing instead on North Sea, Norwegian and diversified LNG sources. Pricing, however, follows global benchmarks regardless of origin.
When Hormuz constrains Qatari LNG, global spot prices climb. Those prices feed into UK wholesale contracts, then into Ofgem's cap, and ultimately into household bills.
What happens next depends on Hormuz
Markets have effectively settled the summer cap. Ofgem's window closes on 17 May. The October cap depends on whether the Hormuz closure persists when markets price that quarter.
- A summer Hormuz reopening would see Qatari LNG flows resume. European storage refills cheaply, pushing the October cap below the summer level.
- Partial disruption keeps rerouted cargoes flowing at higher cost. The October cap stays broadly flat, leaving inflation sticky.
- A prolonged closure would leave European storage depleted heading into winter. The October cap rises further, turning heating demand into bill stress.
Ceasefire progress is the single biggest variable for UK bills in late 2026. For wider context, see our April 2026 UK energy market update.
The summer cap (July to September) will not bite hard. October alters the picture. A high winter cap arrives when heating returns, translating the annual figure into tangible monthly spend.
Should I fix my energy tariff before July 2026?
Ofgem has effectively settled the July cap. The official announcement comes on 27 May 2026. Households now face a binary choice between a standard variable tariff and a fixed energy tariff before July 2026.
- Households already on a competitive fixed deal running into spring 2027 can disregard the noise. Most fixed deals continue paying by direct debit and using your existing smart meter.
- Households on a standard variable tariff should consider a 12-month fix below £1,850. The fix hedges the July rise and any subsequent autumn movement.
- Households whose fix expires between July and October will roll onto the cap at the new July rates. Check the October forecast against new 12-month deals before re-fixing.
Iran war and UK energy prices: FAQ
How has the Iran war affected UK energy prices in 2026?
The 27 March Hormuz closure removed roughly 20% of global LNG. UK wholesale gas peaked about 75% above pre-conflict and stayed 35% above pre-closure by late April. Forecasters expect the July 2026 energy price cap to rise 14-18%.
Why does the Strait of Hormuz matter for UK energy bills?
Hormuz is the only export route for Qatar's LNG, which supplied 12-14% of Europe's gas. UK contracts price off the Dutch TTF gas benchmark, so global LNG shocks pass straight through.
How much will the UK energy price cap rise in July 2026?
Cornwall Insight forecasts £1,866-£1,929 for the July-September summer cap, up 14-18% on April. The official Ofgem Q3 cap announcement is scheduled for 27 May 2026.
Should I fix my energy tariff before July 2026?
A 12-month fixed energy tariff under £1,850 hedges the July rise and any winter move. A fixed deal already running into spring 2027 protects you.
Will UK energy prices come down in 2026?
Only if Hormuz reopens before markets price the October-December cap. A summer reopening pulls the October cap below the summer level. Continued disruption keeps the October cap flat or higher.