Institutions predict that the UK’s energy price cap will rise by about 16% in January, as Middle East conflicts drive up wholesale prices.

智通财经2026/09/30 10:06

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Institutional analysts said on Wednesday that the UK's quarterly household energy price cap is expected to rise by about 16% in January, as the ongoing Iran conflict keeps wholesale energy prices elevated.
This forecast comes as the UK government has removed the 5% household electricity tax starting from October, and the new Labour Prime Minister Burnham delivered his first major speech on Tuesday, mentioning the necessity to reduce energy costs.
The institution stated that this sharp increase is mainly driven by the escalation of the Middle East conflict, which continues to disrupt natural gas supplies to the UK and other regions worldwide.
Disruptions to Middle Eastern shipping and restricted LNG exports from Qatar, one of the world’s largest natural gas exporters, have caused international natural gas prices to surge.
The institution predicts that energy regulator Ofgem’s price cap will rise to £1,999 per year for typical usage in January, equivalent to about $2,652.67, up £276 from October’s £1,723, marking the highest level since March 2023.
Wholesale energy prices are the single largest influencing factor on Ofgem’s household price cap, which is set quarterly using a formula and also reflects network costs for suppliers and environmental and social levies.
Ofgem sets the wholesale portion of the price cap using a fixed observation window, which means that the forecast for the January cap level may change.
The institution noted that the observation window for the January cap is now nearly halfway through, with the price increases seen in September already locked in, making a January increase almost certain.
Overall, market sentiment is focused on the impact of energy costs on household expenses and inflation, with future attention centering on the Middle East situation and the pace of natural gas supply recovery.

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Institutions predict that the UK’s energy price cap will rise by about 16% in January, as Middle East conflicts drive up wholesale prices.

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