The UK energy regulator Ofgem announced on May 27, 2026, that it will raise the household energy price cap by 13% in July, citing supply constraints caused by the ongoing Iran war and the resulting oil shock as the primary drivers for this increase [1]. The new cap will push a typical household's annual gas and electricity bill from £1,641 to £1,862, marking the highest level since early 2024 [1]. Specifically, electricity prices are set to rise by around 5%, while gas bills will surge by 24% [1].
Ofgem's price cap, which is reviewed quarterly, is designed to limit how much households can be charged for energy utilities [1]. The regulator noted that 40% of energy accounts in Britain are on fixed-term contracts and will be shielded from the July price rises [1]. Despite this, the majority of households will face increased costs. The UK has seen a reduction in energy usage, with Britons using 7% less electricity and 17% less gas since the last review, when Ofgem lowered the price cap by 7% [1]. Ofgem stated it will factor this drop in usage into its price cap figures from July [1].
The market impact has been significant, with Brent crude oil prices surging by approximately 33.5% and June gas futures on the Dutch TTF jumping nearly 50% since the outbreak of the Iran war and the closure of the Strait of Hormuz, a critical shipping route [1]. Although energy prices have cooled from their wartime highs, they remain elevated and volatile [1].
Looking ahead, Ofgem is expected to hike the price cap again in October. Energy analysis agency Cornwall Insight forecasts the cap could rise to £1,899.44, representing a further 2% increase from July's level [1]. UK Energy Security Secretary Ed Miliband described the price cap rise as 'deeply unwelcome news for households across the country,' emphasizing the ongoing cost pressures faced by British consumers [1].
CONCLUSION
Ofgem's decision to raise the energy price cap reflects ongoing volatility in global energy markets driven by the Iran war and supply disruptions. With further increases expected in October and energy prices remaining well above pre-crisis levels, UK households are likely to face continued financial pressure. The market response underscores the UK's vulnerability to global energy shocks.