Households brace for fresh energy bill shock as Iran war pushes up oil and gas prices
By HUGO DUNCAN, BUSINESS EDITOR
Updated: 14:05 EDT, 20 July 2026
Households face a renewed energy price shock after oil topped $90 for the first time in more than six weeks and gas soared.
Brent crude rose as high as $91.42 a barrel on Monday after the US and Iran exchanged fresh strikes while benchmark gas prices surged to a four-month high above €60 per megawatt hour.
Oil and gas prices eased later in the day amid signs that negotiations are continuing between Washington and Tehran over a deal to end the war.
But with the conflict currently escalating, analysts warned of further pain ahead for households as energy bills rise alongside the cost of food and fuel.
Mortgage rates are also creeping higher once again as the resumption of hostilities in the Middle East threatens to drive inflation higher – forcing the Bank of England to raise interest rates.
The rising oil and gas price threatens to push up household energy bills
The prospect of a cost-of-living squeeze is a major headache for Andy Burnham who has vowed ‘to give people some breathing space’.
He is due to outline his plans on Tuesday.
Higher gas and electricity bills are already biting after Ofgem raised the energy price cap by 13 per cent or £221 at the start of July to £1,862.
The regulator will next month announce the level of the cap from October – spelling more pain for households as Britain enters the winter months.
Danni Hewson, head of financial analysis at AJ Bell, said: ‘If the price of oil and gas continues to rise it will impact where Ofgem sets October’s price cap.
‘Just weeks ago, a deal to end the war had sent wholesale costs plunging, which led to the expectation that the price cap might hold steady when the next change takes effect in the autumn.
‘But now there’s growing concern that households will be hit by higher bills, just as the weather takes a turn.’
The oil price remains well below the peak of $126 a barrel reached in April as war in the Middle East raged. But having fallen back to pre-conflict levels of $70 a barrel early this month on hopes of peace, it has jumped 30 per cent higher in less than three weeks.
The surge comes as intensifying skirmishes between the US and Iran threaten shipping through the Strait of Hormuz, a crucial waterway through which around a fifth of the world’s oil and gas passed before war broke out.
Susannah Streeter, chief investment strategist at Wealth Club, said: ‘Brent crude has set off on a hot streak, trading around $90 a barrel as military action has intensified between the US and Iran. That’s an increase of 30 per cent from lows seen earlier in the month.
‘If oil prices remain elevated and renewed tensions in the Middle East continue to ripple through wholesale energy markets, the risk is that bills stay stubbornly elevated for longer, with the prospect of another increase this winter becoming more likely.
‘Even if hostilities ease, the damage to infrastructure and the knock-on effects on global supply chains mean a fast return to the lower energy prices seen earlier this year looks increasingly unlikely.
‘That raises the prospect of households heading into another expensive winter just as heating demand ramps up, dashing hopes that the pressure on family finances would begin to ease.’
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