Money-saving expert Martin Lewis says UK energy prices are already changing
Martin Lewis says that energy deals are already becoming more affordable following an agreement between the US and Iran. The consumer finance expert stated earlier this week that he anticipated prices would soon fall, offering some rare positive news for hard-pressed British households facing mounting energy costs.
This followed an accord announced between the US and Iran to cease hostilities and reopen the crucial Strait of Hormuz. The memorandum of understanding, which is now in effect, was signed on Wednesday by Donald Trump and Iranian president Masoud Pezeshkian.
The agreement has prompted a decline in oil and natural gas prices, subsequently driving down energy costs. At the time of writing, Brent crude has fallen by approximately $7 a barrel and UK natural gas by around 14 per cent.
Mr Lewis confirmed that fixed energy deals were already being offered at roughly 5 per cent less than before. He said: “Energy fixes have started to get cheaper, now 5% below April price cap.”
Nevertheless, Mr Lewis cautioned earlier in the week that consumers should not anticipate a substantial reduction in the forthcoming price cap, which covers October to December. The next price cap is expected to be announced on August 26 by energy regulator Ofgem, reports the Express.
Approximately 60 per cent of households in England, Scotland, and Wales are on a standard variable tariff, meaning their bills are governed by the price cap. The current energy price cap is due to increase on July 1 by 13 per cent.
This means that a household with typical energy consumption paying by direct debit will pay £1,862 annually.
This represents a rise of £221 on the previous price cap – and Mr Lewis cautioned that it could climb even further, despite the cessation of hostilities.
He said: “The US and Iran signing a framework deal has pushed natural gas prices down. These wholesale prices are a key driver of UK gas and electricity bills. As the six-month graph shows, though, prices still have a long way to fall before returning to pre-conflict levels.
“The good news is that this could lead to slightly cheaper fixed tariffs being launched in the coming days. However, without substantial further drops the October price cap still looks likely to be significantly higher than it is today.”
He was subsequently asked why he believed the price cap would increase from October. He responded: “It’s the same reason the energy Price Cap HASN’T yet risen due to the Middle East crisis. It is time-lagged. So slow to rise, slow to fall.”
