Gas Price Spike Puts Fresh Pressure on UK Energy Bills

UK households are being warned to brace for higher energy bills this winter as European countries rush to replenish natural gas stores, with wholesale gas prices already at three-year highs, according to BBC. The European benchmark price topped €75/MWh on Wednesday, its highest since late 2022, while UK natural gas prices this week rose above 185p per therm, also the highest since late 2022. The rise has been driven by renewed hostilities between the US and Iran and concern that the Strait of Hormuz could stay closed longer, keeping gas and oil flows constrained. Hamad Hussain of Capital Economics said risks to gas prices were “definitely tilted towards the upside” and forecast prices could top €80 by the end of this year. Higher wholesale costs feed into Ofgem’s price cap, which rose in July and will increase by 4% in October to £1,723 for a typical household. Cornwall Insight has forecast domestic energy prices could rise a further 9% in the new year.