UK Businesses Hit by Energy Cost Surge from Middle East Conflict

UK businesses are confronting sharp increases in energy costs as wholesale prices surge in response to the ongoing conflict in the Middle East, which began in late February and has disrupted key shipping routes including the Strait of Hormuz. The rises, affecting electricity and gas contracts, are hitting firms particularly hard during April, a peak period for renewals, with no protective price cap in place as exists for households.

According to forecasts from energy consultancy Cornwall Insight, electricity prices for businesses have climbed between 10 and 30 percent since late February, while gas costs have risen more dramatically, by 25 to 80 percent depending on sector, business size and consumption levels. For a typical small industrial or commercial operation, such as a larger retail or leisure site or a small manufacturer, an average 12-month electricity contract now stands at £578,000, an increase of about £96,000 from early February. Gas bills for similar firms have jumped by £376,000 to just over £1.02 million annually.

The escalation stems from heightened risks to global energy supplies, particularly liquefied natural gas shipments through the Strait of Hormuz,...