Market volatility caused by international politics and trade issues has led to unexpected increases in energy prices, even as tensions in the Middle East have eased.

Experts warn that high gas prices and declining North Sea output limit long-term gas supply for heating, emphasizing the need for sustainable energy solutions.

The increase in bills, despite lower wholesale prices, is partly due to broader system costs and support measures for vulnerable groups, with long-term relief possible through a transition to cleaner energy sources.

A slight decrease in the price cap is forecasted for January, contingent on geopolitical developments, weather conditions, policy costs, and investments such as nuclear capacity.

Households in the UK can expect their energy bills to rise by around 1%, or approximately £17, reaching an average of £1,737 annually in October, as the energy regulator Ofgem announces the new price cap.

Volatile wholesale energy prices, driven by geopolitical factors such as US trade policy uncertainty and international tensions, have contributed to the rise in energy costs despite earlier optimism.

Ofgem will confirm the updated price cap on August 27, which limits what energy companies can charge per kilowatt hour but does not directly cap total bills, which depend on individual consumption.

The forecasted increase reflects changes in the upcoming price cap, including expanded support measures like the Warm Home Discount scheme for vulnerable households, adding about £15 to typical bills.

Experts from Cornwall Insight, including Dr. Craig Lowrey, stress that higher bills are unwelcome, especially with winter approaching, and that the price cap reflects more than wholesale prices, including policy and support costs.

The UK government emphasizes that long-term reductions in energy bills depend on transitioning to clean, homegrown energy sources and is supporting households through measures like expanding the Warm Home Discount and improving consumer protections.

Recent volatility in wholesale energy prices, driven by geopolitical concerns, has led to a revised forecast that marks a reversal from July’s prediction of a 1% decrease in bills, which was based on easing Middle East tensions.