Iran Conflict: What It Means for UK Business Energy Prices

The US and Israel launched military strikes on Iran over the weekend. Oil is up over 9%, European gas has surged up to 28%, and the Strait of Hormuz has effectively shut down. Here's what UK businesses need to know — and what to do about it.

On Saturday 28 February, the US and Israel launched coordinated military strikes on Iran. Iran's Supreme Leader Ayatollah Khamenei was killed, along with several senior military and security officials. The operation — dubbed "Epic Fury" by the US — has continued into Sunday and Monday.

Iran has retaliated with missiles and drones targeting Israel and US military assets across the Gulf region, including strikes in the UAE, Qatar, Kuwait, Bahrain and Saudi Arabia. Dubai's international airport and the port of Jebel Ali were both damaged.

Critically for energy markets, Iran has moved to close the Strait of Hormuz. While Iran says the strait is technically open, insurers have withdrawn cover and most shipowners have stopped sending vessels through. Around 100 ships have accumulated on both sides.

The Strait of Hormuz is a narrow waterway between Iran and the UAE. Around 20% of the world's oil and 20% of global LNG (liquefied natural gas) passes through it every day. Qatar — one of the world's largest LNG exporters — relies on it entirely.

The UK doesn't import gas directly from Iran, but that's not really the point. Gas and LNG are traded on global markets. When a major supply route shuts down, prices move everywhere. European gas is benchmarked against the Dutch TTF, which jumped up to 28% on Monday morning — the biggest single-day move since August 2023.

UK wholesale gas and electricity prices closely track European benchmarks. When TTF rises, UK forward contracts rise too. And because around 40% of the UK's electricity is generated from gas, gas price spikes feed directly into power prices as well.

There's an additional pressure point: European gas storage is currently around 31% — well below last year's levels at this time. That means Europe has less of a buffer if supply gets disrupted for any sustained period.

If your contract is ending in the next 1–3 months: Supplier pricing typically lags wholesale markets by a day or two. The quotes you'd get today may not yet fully reflect Monday's moves. If you've been putting off getting quotes, now is the time — not out of panic, but because the window before suppliers reprice is likely short.

If your contract runs until later in 2026: You have time, but it's worth keeping a close eye on how this develops. If the Strait of Hormuz remains disrupted for weeks rather than days, forward contracts for later in the year will move higher too.

If you're already locked in on a fixed contract: Your rates are protected until your contract ends. No action needed right now, but it's worth noting where the market is when you come to renew.

If you're on out-of-contract/deemed rates: You're already paying above market rates, and those rates will likely rise further as suppliers adjust. Getting onto a fixed contract should be a priority.

In June 2025, Israel and Iran fought a 12-day war. Gas prices spiked around 18% on Strait of Hormuz fears, then came back down once the fighting stopped and shipping resumed. Some people will look at that and assume the same thing will happen this time.

It might. But there are some important differences:

It's important to be honest about the uncertainty here. Nobody knows how long this conflict will last, whether the Strait of Hormuz will fully reopen, or what happens to Iran's government next. Some analysts think this could be resolved in 1–2 weeks; others think it could drag on for much longer.

We'll continue to update our daily and weekly market reports as the situation develops. Our job isn't to predict geopolitics — it's to give you clear, factual information so you can make good decisions about your energy contracts.

Events like this bring out the worst in some corners of the energy industry. If a broker calls you this week with doom-and-gloom predictions and pressure to sign a deal immediately — be cautious. Nobody knows how long this conflict will last or where prices will settle. Anyone who tells you otherwise is guessing, or worse, trying to rush you into a decision that benefits them more than it benefits you.

Trust your gut. If you feel the time is right and the rates make sense for your business, lock them in. If you're not sure, take a breath, look at the data, and make the decision when you're ready — not when someone else tells you to.

This is a significant event for energy markets. It's the biggest disruption to global energy supply routes since Russia's invasion of Ukraine in 2022. But it's not a reason to panic — it's a reason to be informed and to act sensibly.

We've been through volatile markets before, and our advice remains the same: understand where you stand, get quotes so you have options, and make decisions based on facts rather than headlines. That's what we're here for.

We publish free daily and weekly market reports with forward curve analysis, pricing signals and renewal guidance — so you can follow the data for yourself and always be in a position to make the right call.