How the conflict in the Middle East is impacting UK business energy

Ongoing developments in the Middle East are putting significant pressure on the global economy, with energy markets particularly affected. It’s adding fresh uncertainty to global energy markets that have remained sensitive since the 2022 energy crisis.

We understand that many businesses are concerned about what this could mean for their energy costs now and in the future. Here we’ve answered some of the key questions you may have today.

Are global events increasing energy prices?

Yes. The situation in the Middle East led to increases in wholesale energy prices in March 2026. While prices have begun to decrease over the beginning of April, they remain higher than they were before the conflict begun. Wholesale costs account for a significant proportion of the total cost of supplying energy to customers, so sudden increases in the market raise the cost of supplying energy. 

Because it’s a global market, prices are affected by things like international demand, extreme weather events or political unrest. So an unseasonably cold winter in Europe, or a disruption to supply anywhere in the world, can ripple through to your business energy contract.

How much have energy prices increased by?

In the short term, the current wholesale prices for UK gas energy delivering into Winter 2026 and Summer 27 (Apr-26 – Mar-27) have, at the time of writing on 22 April 2026, increased by 37% and 28% respectively^{1, 2} since the start of the year. This is down from their peaks in late March^{1, 2}.

While volatility has yet to meaningfully reduce since the beginning of the conflict with volatility in the UK gas market having increased by 142% and 196% , based on one measure. This increase in both price level and volatility is due to two factors: firstly, the initial lack of availability of energy exports due to the current situation, but secondly, and likely more significantly, the price increases are the result of the markets’ pricing-in the additional risk of an on-going inability to export energy through the strait.

UK wholesale gas prices¹

UK wholesale electricity prices²

How have prices moved since the conflict began?

Prices have repeatedly moved up and down in response to events in the Middle East:

• On 10^th March when the markets reopened after Iran’s new leadership was confirmed, prices were 15-20% higher than they were when the market closed on Friday before ³
• No sooner than prices had increased, they fell back to levels seen in the opening week of the conflict ^{1 2}
• On 9^th April, a ceasefire was announced, and prices eased further ⁴
• On 12^th April, the Strait was closed, and prices rose again ⁵
• On 17^th April, it was announced that the straight was reopened ⁶, and priced reduced
• But the following day on 18^th April, the Strait was closed again ⁷, increasing prices somewhat.

More recently, prices over the past couple of weeks have generally trended downward, as the market has reduced risk premiums associated with the probability of a larger-scale conflict materialising.

These fluctuations demonstrate that wholesale energy markets respond not only to actual supply and demand, but also to expectations and perceived risks, which can change quickly and lead to short-term volatility.

How could market uncertainty shape up in the months ahead?

In the medium term, market uncertainty could drive the UK energy market in one of two opposite directions, depending on the scenario.

If the strait continues to be inaccessible, further price increases could occur as the previously priced-in probability of disruption becomes a reality. In addition, as oil and energy are core inputs into the wider economy, a prolonged closure could be inflationary, putting further pressure on the global economy,

Alternatively, if the crisis in the strait comes to an end faster than the market currently predicts, the prices – all else equal – should reduce.

Why is the Strait of Hormuz so significant?

Strait of Hormuz is a narrow strait of ocean along Iran’s coastline. Due to the heightened security risks to international shipping, commercial tankers for LNG and oil are avoiding the area. Prior to the conflict, 34% of world oil exports⁸ and 20% of it’s LNG⁹ were shipped through the strait. In addition, Qatar have also ceased LNG exports¹⁰.

Consequently, the closure of the strait has had a significant impact on global energy supply, which caused prices to increase.

Were energy prices stable before this conflict began?

Between 2017 and 2020, wholesale electricity prices were relatively stable, averaging around £45 per MWh. This changed significantly during the energy crisis of 2022, when prices rose sharply and peaked at close to £650 per MWh ¹¹.

Prices have since fallen from these highs, but they have not returned to previous levels of stability. Instead, the market has remained more reactive, with prices moving more sharply in response to global events - including recent uncertainty in the Middle East.

UK baseload power prices for the season ahead £/MWh¹²

Are renewables or nuclear the answer to long-term price stability?

Whilst it is clear that gas will have a role in the energy mix well into the 2030’s, both renewable and nuclear energy are increasingly seen as vital parts of the UK’s energy system. They help to reduce reliance on unpredictable global energy markets, which makes long-term investment in these technologies an important step towards a more resilient energy sector.

According to the Energy and Climate Intelligence Unit, renewable energy sources such as wind and solar act as a crucial buffer against gas⁷, which can be more sensitive to geo-political issues. However, while renewables can reduce impact that global energy markets have on UK business energy prices, they’re not a silver bullet to remove all forms of volatility. Renewables are inherently intermittent - the sun isn’t always shining, and the wind isn’t always blowing. Balancing energy supply and demand will remain a key challenge, even as new renewable capacity is added to the grid.

On 25 March 2026, wind generation reached a record 23,880 MW in a single day, highlighting the scale at which renewable energy is now contributing to the UK’s electricity supply. From a single-source perspective, including imports, wind was the largest source of electricity generation for the fourth consecutive quarter.

Recent UK electricity generation trends ¹³

What are business energy suppliers doing to help manage the impact of this volatility?

As a business energy supplier, our role is to help manage this complexity and work to reduce the impact of market volatility for our customers. We continuously monitor market conditions and buy energy at different points in time to try and secure the best possible value for our customers. 

During periods of heightened volatility, some suppliers may temporarily pause price books. These are standard pricing structures used to offer quick quotes, based on typical usage patterns. This helps to ensure the prices offered are reflective of the market, as markets can move down as quickly as they rise.

Alongside this, we continue to transform our business by investing in digitalisation, automation and more efficient processes. This helps us remain lean and agile, so we can continue to efficiently react to the changing global energy markets.

When and how will this impact my business energy bill?

Movements in wholesale markets are not always felt immediately. They feed into business energy costs over time. 

The impact will vary depending on contract type and timing. Customers on more flexible arrangements may experience price movements more quickly. Customers on fixed agreements may not see a commodity price impact until their next renewal is due.

Estimated annual bill values for a small industrial customer ¹⁴

Forecasts from Cornwall Insight show the impact that the situation in the Middle East has had on business energy while at it’s peak in March 2026. Their illustrative example focuses on two typical small industrial customers, with annual consumption of 2.3 GWh for electricity and 15.3 GWh for gas:

• Electricity - Estimated annual bills have risen by around 20% between prices available at the end of February and those available by the end of March.
• Gas - Estimated annual bills have increased by around 60% over the same period.

If you’re already a British Gas customer and you’re approaching renewal soon, we can still offer a range of different options to suit your business. Find out more on the process on our renewing page.

If you’re not currently a British Gas customer, get a quote for your business energy and join one of the UK’s leading business energy suppliers.

In this article

• Are global events increasing energy prices?
• How much have energy prices increased by?
• How have prices moved since the conflict began?
• How could market uncertainty shape up in the months ahead?
• Were energy prices stable before this conflict began?
• Are renewables or nuclear the answer to long-term price stability?
• What are business energy suppliers doing to help manage the impact of this volatility?

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