Military strikes against Iran by Israel and the United States have sent shockwaves through global energy markets. Rather than stabilising the Middle East, the escalation in effect closed the Strait of Hormuz to shipping, the narrow shipping lane between Iran, the UAE, and Oman that carries around 20% of global oil supply and a significant share of liquefied natural gas (LNG). With the strait in effect closed and Qatar halting LNG production on 2 March, wholesale energy prices across Europe surged. European wholesale gas prices rose about 50% on 2 March, and by 19 March UK day-ahead gas was 93% above its pre-war level.

For UK businesses, the question is simple: how will the Iran conflict affect energy rates in Britain, and what steps can they take now?

What has happened since the April ceasefire?

This article was first written on 10 April 2026, two days after a ceasefire took effect. That truce was repeatedly broken, and UK wholesale prices are now far higher than they were in the spring.

A US-Iran agreement signed on 17 June to extend the ceasefire brought some relief, and UK day-ahead gas fell to 98p a therm on 25 June, its lowest since the war began but still above the pre-war 79.7p. On 8 July, a day after three tankers including a Qatari LNG carrier were struck near Hormuz, the US declared the ceasefire over. By mid-July the US had reinstated its blockade, and Iran's Revolutionary Guards said the strait would stay closed. Day-ahead gas rose 45% in under three weeks, from 104p on 6 July to 152p on 24 July.

Europe then went into winter with low gas storage, and QatarEnergy has kept force majeure in place on some LNG deliveries, including to Italy's Edison. By the end of October prices had climbed higher still:

  • Day-ahead gas: 253p a therm on 30 October, the highest since December 2022.
  • Year-ahead gas: 199p a therm on 30 October, up from 69p before the war.
  • Year-ahead electricity: £152/MWh on 30 October, the highest since April 2023.
  • Day-ahead electricity: £213/MWh on 28 October, its 2026 high.

On 2 November, hopes of a breakthrough in US-Iran talks knocked day-ahead gas down 8.7% in a day to 231p, still nearly three times February's average of 80p. Late that day the US carried out limited strikes on Iran's Qeshm Island, aimed at missile sites it said had been used to attack US planes. No deal has been agreed and talks are continuing.

The year-ahead price is the one behind fixed business quotes, and you can follow it on our live market data page.

Line chart of UK day-ahead wholesale gas in 2026, from 2.4p a kWh on 18 February to 7.9p on 2 November, with the strikes on Iran on 28 February and the ceasefire collapse on 8 July marked

How UK Wholesale Energy Prices Are Responding

In April, the Ofgem price cap held household rates until the end of June. Bills did then rise: Ofgem lifted the cap by 13% in July and by 4% in October, to £1,723 a year for a typical household. In March, Cornwall Insight forecast that the typical annual household bill could reach £1,973 from July, an increase of £332. The impact was already visible at the pump in March.

As of 23 March, RAC figures showed diesel prices climbing from 142.4p to 169.8p per litre, while petrol has risen from 132.9p to 146.4p per litre. Because a large share of UK electricity is generated from gas, rising wholesale gas prices feed directly into electricity costs. With energy prices already elevated, continued upward pressure is unwelcome news for businesses already managing tight margins.

Diesel was hit hardest, rising 27.4p per litre in the first weeks of the conflict, compared with 13.5p for petrol. While neither fuel had then reached the record highs set during the 2022 Russia-Ukraine crisis, the pace of increase was notable. Diesel at 169.8p was then approaching levels last seen in late 2022, and any further escalation in the Strait of Hormuz would put additional upward pressure on both fuels. Diesel has since passed its 2022 record, and in October it topped £2 a litre for the first time, according to the RAC. For businesses with fleets or high mileage, these increases translate directly into higher operating costs.

What UK Businesses Can Do to Manage Rising Energy Costs

Global shocks like the Iran conflict are outside any business's control, but how they respond is not. With year-ahead gas at 199p a therm on 30 October, up from 69p before the war, higher wholesale costs feed through into commercial energy rates quickly, so businesses near contract renewal should act early.

A fixed-rate energy contract can offer valuable price certainty by locking in a rate and shielding against further global disruption. A flexible contract may suit businesses better if tensions ease and prices fall, though this approach requires active market monitoring. The right choice depends on a business's size, financial stability, and appetite for risk.

Either way, reviewing energy usage now is one of the smartest steps any business can take. Even modest reductions in consumption can make a noticeable difference over time, helping businesses stay resilient regardless of what happens on the global stage.

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Written By Elizabeth Heverin and Edited by Faith Labong at Purely Energy.