Household energy price cap could more than double as Tehran’s Parliament has voted to close the Strait of Hormuz.
The Strait of Hormuz is a key passage for billions of barrels of oil and gas every day which will have an impact on energy bills if it is closed.
Following the US attack on three nuclear facilities on Iran, Tehran could retaliate by disrupting oil and gas supply routes, this could see the UK’s energy price cap hitting “£3,000-£4,000 per year.”
This year Ofgem announced a 7% reduction on the energy price cap for July, this will reduce household bills down by £129 to £1,720 per annum.
Chris Wheaton, an oil and gas analyst at Stifel has warned that should the Strait of Hormuz close this will push up the price of oil and gas and the cost of energy could increase to levels seen in 2022 when Vladimir Putin launched his full-scale war on Ukraine.
GB News reported that he wrote, “We are much more worried about European gas prices than we are about oil prices.”
“If LNG production from Qatar and the UAE was disrupted, we see a repeat of 2022: European gas prices rising so LNG flows to Europe and not Asian consumers to ensure storage is filled.”
Wheaton added, “In a UK context, that would mean a UK energy price cap of £3,000-4,500 per year, which would be economically and politically disastrous, in our view.”
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