How the Iran conflict is impacting UK business energy

2 April 2026

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 has led to increases in wholesale energy prices. 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.

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 MWh1.

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 £/MWh.1

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 volatile and expensive gas2. 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 trends3

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 pricebooks. 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 customer4

Forecasts from Cornwall Insight show the impact that the situation in the Middle East has had on business energy. 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.

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