£5bn energy cost impact of Iran conflict

Higher wholesale gas and electricity prices since the start of the US-Iran war will add an estimated £5bn in costs to the UK economy.

The Energy and Climate Intelligence Unit said for every week the conflict continues, UK gas and electricity users are likely to face a further £190m in excess costs on energy bills, with the full effects being felt next year as wholesale gas prices feed through into contracted energy rates.

With added transport costs due to higher oil prices, the total hit is around £10bn.

Jess Ralston, Head of Energy at ECIU said: “Yet again, events thousands of miles away are having a direct impact on the cost of living in the UK because of slow progress on electrification and so ongoing dependence on oil and gas which is priced by international markets.

“The latest volatility in these global gas and oil markets shows how exposed households and businesses remain to geopolitical shocks. Gas prices just reached a 3-year high and oil prices remain inflated too, recently reaching over $90/barrel. Bills could go up again in January if the US Iran conflict continues.”