So far, households under Ofgem’s energy price cap have been shielded from the spike in wholesale energy prices.
The cap resets for three months in July, and we are more than halfway through the window the regulator uses to calculate the new price. Experts have been expecting a big jump at this point.
The government has promised support based on household income, but hinted this might not come until autumn.
Dr Craig Lowrey, principal consultant at Cornwall Insight, says a ceasefire eases some of the immediate pressure on gas markets but “does not wipe the slate clean”.
If the strait opens and stays open this will ease prices and be reflected in the July price cap, he says, but adds: “Unless prices fall well below where they were before the conflict, the wholesale price rises seen through March and early April will still feed through to bills.”
Lars Jensen from Vespucci Maritime says companies will want reassurances on how vessels can transit safely, and he doesn’t believe the two-week pause will be enough to restore trust.
“We should see an increase in exiting vessels,” he told Today.
“We will likely also begin to see a trickle of vessels going into the Gulf, but those two will not be of the same magnitude.”
Aside from movement through the strait, Lowrey says damage to gas infrastructure in Qatar will take years to rebuild, meaning supply constraints will continue.
“As a result, even with a ceasefire, wholesale gas prices are likely to stay elevated for some time, limiting how far the July price cap can fall.”