Household energy bills could rise by £332 a year in July as recent sharp increases in wholesale prices will feed into Ofgem's price cap, according to the latest forecasts.
Analysts Cornwall Insight said forecasts for the watchdog's July-September price cap had risen to £1,973 a year for a typical dual-fuel home, an increase of £332 or 20% on the April cap.
This marks a significant advance from its forecast from just over two weeks ago, when it had forecast a 10% increase from July.
Independent energy consultants update their forecasts every week as the US-Israel war with Iran escalates and the energy market is volatile.
Cornwall said summer household energy bills appear to be higher than he had anticipated before the escalating conflict in the Middle East, which has sent wholesale oil and gas prices soaring.
Even if wholesale prices quickly returned to pre-conflict levels, some of the recent volatility will be factored into the next price cap, which runs from July to September, he said.
However, the figure is likely to change and the magnitude of the increase until the next price cap will depend on how long gas prices remained elevated and how long the period of disruption continues.
Ofgem's price ceiling is based on average wholesale prices over a three-month period.
A spokesperson for the Government's Department of Energy Security and Net Zero said Cornwall's forecasts are “highly speculative” and added: “Using fluctuations in wholesale prices to predict what will happen in the coming months is not reliable.
“Tackling the affordability crisis is the Government's number one priority. That's why we are acting to reduce bills now and in the long term.”
The price most households pay for energy will fall by 7% from April 1, or £117 a year, boosted by the Government's promise to reduce bills by an average of £150 by removing green subsidies.
However, gas prices have been rising in recent weeks, and this could affect future electricity prices and how much it costs to heat people's homes.
On Thursday, UK natural gas prices hit a three-year high after rising around 25% during the day. Prices had dropped a bit on Friday.
The latest surge was driven by attacks on energy facilities in Iran and Qatar, stoking fears about long-term damage and disruptions to gas supplies.
Shell said one of its main gas plants was damaged in the attack in Qatar, which is used to make things like transportation fuel and ingredients for plastics and cosmetics.
Qatar's state-owned energy company, Qatar Energy, has stopped production of liquefied natural gas (LNG) at its facilities since early March.
Meanwhile, the UK's competition watchdog is looking into concerns that households reliant on heating oil could face price surges in the wake of the conflict.
Home heating oil, used by around 1.5 million households in the UK, mainly in Northern Ireland, is not covered by Ofgem's price cap, which currently sets prices until the end of June.
The Competition and Markets Authority (CMA) announced on Friday that it had launched a market study into the supply of heating oil to see how it affects consumers and whether intervention is necessary.
