UK energy suppliers pull fixed-tariff deals as Iran crisis drives up prices
Household providers withdraw or raise tariffs after surge in wholesale costs
British household energy retailers are withdrawing or raising their fixed-price tariffs as the war in the Middle East sparks a surge in wholesale energy costs.
The number of such deals available fell from 38 on Saturday to 17 on Wednesday, according to data from USwitch, while the cheapest have climbed from £1,509 to £1,640 a year.
The changes reflect suppliers’ nervousness over wholesale prices after UK gas prices jumped roughly 75 per cent between Friday and Tuesday.
“It’s risk management,” said Nigel Pocklington, chief executive of Good Energy, which ditched its planned launch on Tuesday of a new fixed-price deal. “You don’t know where the price is going to go, nor how many people are going to sign up” to fixed deals.
Laura Hinton at Moneysupermarket Energy said suppliers were responding to new uncertainty, having previously expected relatively stable energy costs until a rise towards the end of the year.
“As a result of this uncertainty, we’re seeing . . . fixed deals being withdrawn and repricing of tariffs,” she added.
Gas prices in Europe and Asia have climbed because of disruption to supplies from the Middle East, with the Strait of Hormuz virtually unpassable and Qatar’s gas infrastructure damaged.
The UK buys relatively little gas directly from the Middle East but is affected by price shocks as it has to compete with Asia and Europe for shipments.
Higher gas prices also push up UK electricity prices since gas-fired power stations still generate just under a third of the country’s electricity and are needed to meet demand most of the time.
The withdrawal of fixed-priced tariffs has echoes of the energy crisis in 2021 and 2022 when gas prices leapt as economies rebounded from pandemic lockdowns and Russia launched its full-blown invasion of Ukraine.
Suppliers pulled deals and consumers switched on to default variable tariffs, which are protected by the UK price cap on energy bills.
While the price cap, which currently covers just over 60 per cent of the market, was fixed last week from April to June, consultancy Cornwall Insight on Wednesday forecast that it would rise by 10 per cent in July if current wholesale prices persisted.
The latest shock to wholesale prices comes as the retail sector continues to grapple with the legacy of the 2021-22 shock, when dozens of retailers collapsed.
Ofgem, Britain’s energy regulator, has since introduced tougher rules on capital adequacy although several suppliers, including Britain’s largest by customers Octopus Energy, are not yet meeting their targets.
Meanwhile, amid persistent cost of living pressures, households owe a record £3.2bn to suppliers with no repayment arrangement set up as of the third quarter of 2025, according to Ofgem figures.
“We know people are worried about the impact of the conflict in the Middle East on energy prices and what this means for them,” Ofgem said. “Importantly in the short term, customers on a fixed tariff and those protected by the price cap will not see any immediate impact on their bills, as the price cap is already set until the end of June.”
Ned Hammond of trade group Energy UK said new fixed-price deals “have to reflect the latest price movements, and given the current price volatility it is very challenging for suppliers to price deals for the next 12 months and beyond”. He added: “As always, any customer concerned about their current situation should reach out to their supplier to discuss options available to them.”