The Iran crisis has escalated again, bringing renewed disruption to global energy supplies and pushing UK wholesale electricity and gas prices sharply higher.
Following a short period of relative stability, further attacks involving the United States and Iran have placed the Strait of Hormuz back under severe pressure. Shipping activity through the route has fallen significantly, commercial tankers have reportedly been hit and concerns are growing about the movement of oil and liquefied natural gas from the Middle East.
The impact is already being reflected in UK wholesale energy markets.
At the time of writing, UK electricity spot prices have risen to approximately £125.69 per MWh, their highest level since the Iran conflict began. UK natural gas prices have also climbed to approximately 152.18 per therm.
For UK businesses, the message is not to panic, but it is important to recognise that the risk of further price rises has increased.
If your electricity or gas contract is due to renew within the next 12 months, now may be the time to seriously consider securing your next agreement.
What is happening with the Iran crisis?
The latest escalation follows the breakdown of the previous interim ceasefire between the United States and Iran.
Fresh attacks have taken place across the Gulf, while commercial vessels and energy infrastructure have faced further threats. Shipping activity through the Strait of Hormuz has fallen significantly, with many of the vessels responsible for transporting large volumes of oil and liquefied natural gas continuing to avoid the area.
Iran-aligned Houthi forces in Yemen have also threatened to restrict Saudi Arabian shipping through the Red Sea.
This means two of the world’s most important energy shipping routes are currently under pressure:
- The Strait of Hormuz
- The Red Sea and Bab el-Mandeb Strait
Although diplomatic negotiations are continuing, there is currently no guarantee that a further ceasefire will be agreed or that normal shipping activity will resume.
How has the position changed since March?
We first looked at the potential consequences of the conflict in our March guide, Iran Crisis: Impact on UK Business Energy Prices.
At that stage, the major concern was that disruption through the Strait of Hormuz could restrict global oil and gas supplies, pushing prices higher around the world.
There have since been periods when markets settled and prices began to ease. However, the latest escalation has brought those supply concerns firmly back into focus.
The difference now is that the renewed risk is already being reflected in UK wholesale gas and electricity prices.
Why is the Strait of Hormuz so important?
The Strait of Hormuz is a narrow shipping route connecting the Persian Gulf with the Arabian Sea.
Before the conflict, around one-fifth of the world’s oil and liquefied natural gas passed through the route. It is particularly important for energy exports from Qatar, Saudi Arabia, the United Arab Emirates, Kuwait and Iraq.
There are very limited alternative routes available for these supplies.
When tankers cannot travel through the Strait safely, less oil and LNG can reach international markets. Shipping costs and insurance premiums can also increase, adding further pressure to the cost of transporting energy around the world.
Even where physical supplies continue, the risk of further disruption can be enough to push wholesale prices higher.
UK wholesale electricity and gas prices are rising
The latest escalation is already feeding through into UK wholesale energy markets.
July 2026 UK Wholesale Energy Snapshot
| Wholesale Market |
Price at Time of Writing |
Why It Matters |
|
UK electricity
|
£125.69/MWh
|
The highest level since the Iran conflict began, indicating renewed upward pressure on short-term electricity costs.
|
|
UK natural gas
|
152.18p/therm
|
Higher wholesale gas costs can affect both gas contracts and electricity prices because gas-fired generation remains important to the UK power market.
|
*Wholesale prices can change throughout the day. These figures are a snapshot of the market at the time of writing and are not the final unit rates paid by businesses.*
These are wholesale market prices rather than the final unit rates businesses pay.
Business energy prices also include network charges, environmental and social levies, operating costs, supplier margins and other non-commodity charges.
However, wholesale energy remains a significant part of the overall cost. If wholesale gas and electricity prices remain elevated, suppliers may begin increasing the rates available on new and renewal contracts.
What is happening to global oil prices?
Global oil prices have also risen following the renewed escalation.
Prices have moved sharply as markets react to further attacks across the Gulf, restricted shipping through the Strait of Hormuz and concerns that disruption could spread into the Red Sea.
This demonstrates how sensitive energy markets remain to developments in the region.
Positive news surrounding negotiations can cause prices to ease. Further attacks, shipping restrictions or damage to energy infrastructure can quickly push them back up.
Why does this affect UK natural gas prices?
The UK does not need to buy its gas directly from Iran to be affected by the conflict.
Gas and LNG are traded through interconnected international markets. When supplies from the Middle East are restricted, European and Asian buyers must compete more aggressively for alternative cargoes from elsewhere in the world.
This additional competition can push European and UK wholesale gas prices higher.
It may also make it more expensive for European countries to refill their gas storage facilities ahead of winter.
The longer disruption continues, the greater the risk that increased wholesale gas costs will be reflected in the contract prices offered to UK businesses.
Why can electricity prices rise as well?
The crisis is not only relevant to businesses renewing their gas contracts.
Gas-fired power stations continue to play an important role in generating electricity in Great Britain. They are often required to meet demand when renewable and nuclear generation cannot supply enough power.
Because of the way the wholesale electricity market operates, gas-fired generation can also help determine the overall electricity price.
When wholesale gas becomes more expensive, the cost of producing electricity from gas increases. This can then place upward pressure on electricity prices.
That is why businesses which only use electricity can still be affected by disruption to global gas supplies.
How could energy suppliers react?
Commercial energy prices can move quickly when wholesale markets become volatile.
Suppliers may respond by:
- Increasing electricity and gas contract rates
- Reducing how long quotations remain valid
- Withdrawing particular prices without notice
- Adding a greater risk premium to future contracts
- Becoming more selective about which businesses they quote
- Changing the price difference between one, two and three-year contracts
This means a quotation available today may not remain available at the same price tomorrow.
It also means businesses leaving their renewal until the final few weeks could have fewer options available.
What could happen to energy prices next?
There are still several possible outcomes.
A credible ceasefire and a sustained return to normal shipping activity could cause wholesale prices to ease. However, further attacks or prolonged disruption could push prices considerably higher.
What Could Happen to Energy Prices Next?
| Possible Development |
Potential Effect on Energy Prices |
|
A credible ceasefire is agreed
|
Oil, gas and electricity prices could ease as the immediate risk to global energy supplies reduces.
|
|
Normal shipping resumes through the Strait of Hormuz
|
Improved oil and LNG flows could help wholesale markets settle.
|
|
Attacks or tanker disruption continue
|
Energy prices could remain elevated or rise further as supply concerns increase.
|
|
LNG exports remain restricted
|
UK and European gas prices could face additional upward pressure as buyers compete for alternative supplies.
|
|
Disruption spreads further into the Red Sea
|
Oil, gas, shipping and insurance costs could all increase, placing wider pressure on global energy markets.
|
*These scenarios are intended as a general guide. Wholesale markets can react quickly and differently to geopolitical developments.*
Could energy prices still come back down?
Yes. Prices could ease if the United States and Iran reach another credible ceasefire, attacks stop and normal shipping through the Strait of Hormuz begins to recover.
There have already been significant price movements in both directions during the conflict.
Markets showed signs of stabilising when the previous ceasefire was announced, but prices rose again when hostilities resumed and shipping through Hormuz was restricted once more.
This highlights the difficulty of attempting to identify the perfect time to secure an energy contract.
Prices could come down if the situation improves. Equally, they could rise substantially if:
- The conflict escalates further
- Attacks on commercial tankers continue
- LNG exports remain restricted
- Energy infrastructure is damaged
- The Red Sea becomes more difficult to navigate
- Europe faces greater competition for gas ahead of winter
Nobody can guarantee which direction the market will move next.
How soon should your business review its energy contract?
The closer your business is to its contract end date, the less time it has to wait for the market to improve.
Businesses already paying out-of-contract or variable rates face the greatest level of risk. These rates can be significantly more expensive than a fixed contract and can change at short notice.
When Should You Review or Renew?
| Time Until Renewal |
Our Current View |
|
Already out of contract
|
Act now. Out-of-contract and variable rates can be significantly more expensive and may change at short notice. Remaining on variable prices during a volatile market creates unnecessary risk.
|
|
Within 1 month
|
Secure a new contract as soon as possible. There is very little time to wait for prices to improve, and delaying further could expose the business to higher rates or out-of-contract charges.
|
|
Within 3 months
|
Strongly consider securing now. Prices could ease, but there is also a genuine risk that further escalation could make today’s rates unavailable.
|
|
Within 6 months
|
Review the market now and consider locking in. This gives you time to compare suppliers and contract lengths before making a decision.
|
|
Within 9 months
|
Start reviewing your options. Securing early may be worthwhile where the current price is acceptable and budget certainty is important.
|
|
Within 12 months
|
Obtain prices and assess the risk. You may already be able to secure your next contract, giving you the choice to lock in now or continue monitoring the market.
|
*This is a general guide. The right approach will depend on your current rates, consumption, contract end date and appetite for risk.*
Should businesses secure their next energy contract now?
Businesses can often secure their next electricity or gas contract up to 12 months before their existing agreement ends.
The new contract would not normally begin until the current agreement expires. However, the prices and terms can be agreed in advance.
This protects the business against wholesale price increases that may happen between securing the contract and its future start date.
There is, of course, a trade-off.
If the market improves after you have secured a new contract, cheaper prices may become available. However, if you wait and the conflict deteriorates, the rates currently available could disappear.
The decision should not therefore be based solely on whether prices might fall.
Businesses should also consider:
- Whether the current quotation provides acceptable value
- How much certainty is needed for future budgeting
- Whether the business could absorb a further price increase
- How current prices compare with the existing contract
- The benefits of one, two or three-year contract terms
- The financial risk of remaining on variable or out-of-contract rates
Why reviewing early gives your business more choice
Reviewing your contract early does not mean you must immediately accept a new agreement.
It gives your business the opportunity to:
- Understand the latest market prices
- Compare rates from a wide range of suppliers
- Consider different contract lengths
- Assess the total annual cost rather than only the unit rate
- Decide whether the current price offers acceptable value
- Secure rates before any further market increase
- Avoid making a rushed decision close to the contract end date
Waiting until the last minute removes much of this flexibility.
If prices rise shortly before your current contract ends, you may be forced to choose between the limited rates available or move onto expensive out-of-contract charges.
Our current advice to businesses
Our advice is not to panic or accept the first quotation you receive.
However, if your electricity or gas contract ends within the next 12 months, you should now seriously consider reviewing the market and securing your next agreement.
Prices could ease if the situation improves, but the latest escalation demonstrates how quickly conditions can change.
UK wholesale electricity spot prices are now at their highest level since the Iran conflict began, while UK natural gas prices have risen sharply.
Waiting could result in a better price if peace negotiations succeed.
Equally, the conflict could worsen and the rates currently available could become significantly more expensive.
Securing an acceptable rate now provides price certainty and protects your business against further wholesale market increases.
Compare business energy prices
WIf your electricity or gas contract is due to renew within the next 12 months, you may already be able to secure your next agreement.
Complete our quick business energy quote form to compare the latest electricity and gas prices from a wide range of trusted UK suppliers.
There is no pressure or obligation to proceed. We will review your requirements, compare the available options and clearly explain the total annual cost of each contract.
Get a business energy quote
Alternatively, please call us on 01872 495 111 or email hello@wesave.co.uk.