Energy Market Jitters: What the Latest Global Tensions Mean for Your Business Energy Bills
After a brief return to relative stability, UK business energy prices are once again under pressure – this time from growing unrest in the Middle East. Just as companies began to recover from the energy shock triggered by the Ukraine conflict, fresh uncertainty is pushing tariffs back up. Here’s what you need to know, and how you can act to protect your business.
Why Are Prices Rising Again?
The key driver is fear, not yet a supply issue. As tensions escalate between Israel and Iran, markets are nervously eyeing the Strait of Hormuz – a narrow, high-risk chokepoint through which about 20% of the world’s oil supply travels. While disruption hasn’t happened, even the threat is enough to rattle global energy markets.
According to Energy Aspects’ head of geopolitics, Richard Bronze, the risk to this vital shipping route is “marginally more likely” than it was just days ago – enough to trigger market reactions. That uncertainty is already affecting UK energy prices, which are heavily tied to global gas and oil costs.
What’s the Immediate Impact?
- Forward electricity prices rose 8% this week alone.
- Prices on the YGP portal are up by approximately 1p per unit.
- Average client forecasts show a 5% rise in projected energy spend – just since last Friday.
And remember, this is happening before any real disruption in supply and demand. The increases are based purely on fear that the situation could worsen.
What Should Go Low Carbon Clients Do?
Based on patterns from the Ukraine conflict, we’re already seeing two camps form:
- Lock In Now – The Risk Managers
If your energy contract is up for renewal in 2025 – or even 12 months from now – it may be wise to fix your tariff sooner rather than later. Locking in now could shield you from more dramatic spikes later if tensions continue to escalate.
- Wait and See – The Gamblers
Some may decide to wait it out, betting that this is a short-lived market blip. While it’s possible that prices will retreat if tensions cool, this strategy carries risk. We believe it’s essential you’re aware of the current trajectory so you can make informed choices.
Think About Contract Length
- Long-term contracts could offer greater protection for those who fear ongoing volatility.
- Short-term options may suit those willing to bet on price declines within the next year.
Final Thoughts
We’re still in the early days of what could become a much larger issue. The full effect on UK business energy prices is unknown, but market signals are already pointing to turbulence ahead.
Go Low Carbon will continue to monitor developments closely and issue regular updates. In the meantime, we encourage clients to review their energy positions now – especially if your renewal is on the horizon.
