Craig Lowrey, of Cornwall Insight, said: “Unless wholesale prices fall below pre-conflict levels – which looks unlikely given the scale of disruption and the uncertain repair timeline to key infrastructure in the region – a higher price cap in July is effectively unavoidable. However, the size of the increase depends on the duration of the conflict.”
For those who are on a standard variable tariff at the moment, it could be worth considering fixing your energy tariff for the next year to guarantee your bills.
The case for fixing now
Since a ceasefire between America and Iran was announced last week, the price of the cheapest fixed energy deal has fallen by almost £100, according to comparison website Uswitch.
However, with traffic in the Strait of Hormuz at a standstill amid Iranian attacks and an American blockade, oil prices could shoot up again in the coming weeks.
Dr Lowrey said: “The market could be in the calm before the storm – our understanding is the last of the tankers that transited the Strait have now, or will imminently be, arriving at their destinations.
“Supplies of liquefied natural gas to Europe currently remain healthy given the availability of cargoes from the US.
“But general global market dynamics will ultimately be unavoidable as the overall supply-demand balance becomes increasingly constrained by sustained disruption to vessels through the Strait. Peace talks, or the possibility thereof, should help to mitigate upward price pressure, but fundamentals will inevitably come into play.”
Martin Lewis, the founder of Money Saving Expert, said: “The cost of fixing has dropped since the Middle East ceasefire announcement, but that may start to unravel, so the window of opportunity may close.”
If you are already on a fixed deal, then it is likely you would need to pay an early-exit fee to leave, which means it might not be worth switching at the moment. However, if you’re in the last 49 days of your fixed deal, the rules state you are free to switch without any penalties.
