Energy bill crisis continues as oil costs hit $100 a barrel AGAIN: 'Little choice but to raise prices!'

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Analysts are sounding the alarm over the impact of rising global wholesale energy prices on British consumers

Households are bracing for another punishing wave of energy bill hikes as escalating Middle East hostilities sent oil markets surging past the $100 mark on Wednesday afternoon.

Brent crude climbed nearly three per cent to approximately $100.50 a barrel following strikes on Iranian oil tankers, while UK natural gas prices jumped by a similar margin to around 195p per therm.

Financial markets reacted sharply to the attacks, with traders growing increasingly anxious about potential supply disruptions in the region. The last occasion Brent crude breached the $100 threshold was in late July.

Analysts are now warning that the spike in wholesale energy costs could see significantly higher bills for consumers heading into winter, with the Ofgem price cap likely facing a steep increase in January.

The strikes followed what US officials described on Tuesday evening as retaliatory action after further attempted missile attacks targeting a Navy warship.

The US-Iran conflict has now raged for more than half a year, with each new escalation diminishing investor confidence that any diplomatic resolution can be achieved before the year is out.

Susannah Streeter, chief investment strategist at Wealth Club, said: "Far from showing signs of resolution, the conflict in the Middle East appears to be becoming more entrenched, creating chronic supply concerns around crude and gas, while intensifying trade battles threaten to push up the cost of goods just as central banks are trying to get inflation under control."

The surge in oil costs is already hitting British drivers at the pump.

According to the latest RAC figures, the average price of unleaded petrol rose by 5p a litre over the past week to 167.17p, while diesel increased by the same amount to reach 188.63p.

Ofgem's energy price cap is already set to increase by four per cent in October, but analysts believe a far steeper rise awaits in the new year.

Andrew Goodwin, chief UK economist for Oxford Economics, said: "The increase in wholesale gas prices has more than offset the saving from the Government removing VAT from electricity bills between October and March.

"We think the price cap could rise by another 13 per cent in January wholesale prices are currently well above the level of the previous observation window, and our commodities team expect them to remain high in the near term."

Ms Streeter added: "Given the sustained impact of higher energy prices, the worry is that firms will have little choice, other than to raise prices, which risks creating another inflationary spiral."

Simon Cran-McGreehin, head of analysis at the Energy and Climate Intelligence Unit, pointed out that gas prices had never fully recovered from the shock of Russia's invasion of Ukraine in 2022, and the Iran conflict now threatened households and businesses with yet another winter of mounting bills.

Simon Francis, who coordinates the End Fuel Poverty Coalition, said: "The Ofgem price cap for January is being calculated on prices like these, which means it could be brutal for households already struggling.

"Those who use heating oil or are on some heat networks and are not on the price cap may see increases even sooner."