Israel-Iran Conflict: How UK Business Energy Prices Are Being Affected

The conflict between Israel and Iran has taken a serious turn.

On 13 June 2025, Israel launched a large-scale airstrike on Iranian military and nuclear sites, in one of the most significant escalations in years. The geopolitical fallout is already being felt in global energy markets, and UK businesses are unlikely to be insulated.

Even though the UK doesn’t source energy directly from the Middle East, we operate in a global market. Gas and electricity prices here are shaped by global supply routes, futures trading, and risk sentiment, all of which are being affected by the unfolding situation.

Here’s what UK business energy buyers need to know.

What’s Happened and Why It Matters

Israel’s strike reportedly killed top military leaders, including IRGC Commander Hossein Salami and Chief of Staff Mohammad Bagheri (The Times). Iran has vowed to retaliate, and fears are growing that the conflict could draw in neighbouring states or disrupt key infrastructure.

The biggest flashpoint is the Strait of Hormuz, a narrow passage through which:

• 30% of global seaborne oil
• And nearly one-third of all LNG shipments must travel to reach Europe and Asia (Reuters).

Any threat to shipping in this region sends shockwaves through the global energy system.

What’s Happening to Prices?

Oil Prices

• Brent crude rose more than 10% following the strike, briefly touching $85/barrel, the sharpest gain since 2022 (The Guardian).
• U.S. WTI crude climbed to $77.60, before settling closer to $73.

Oil price increases filter into inflation, transport costs, and industrial overheads, even if your business doesn’t buy oil directly.

Gas Prices

• European TTF gas futures rose 5.7%, and UK gas at the NBP hub mirrored the increase (Bloomberg Energy).
• Forward pricing for Q3 and Q4 2025 is already factoring in ongoing volatility.

This affects both gas-heavy businesses and any UK company that buys power on a pass-through basis.

A New Risk: Eastern Mediterranean Gas Disruption

It’s not just the Strait of Hormuz that’s under threat.

Israel’s offshore gas fields, Leviathan and Tamar, which supply Egypt and help fuel European LNG flows, have halted operations due to regional security concerns (MarketWatch).

This could temporarily reduce available LNG volumes for Europe, tightening the market and putting further pressure on wholesale gas prices.

How This Impacts Electricity Prices

Roughly 38% of the UK’s electricity is generated from natural gas (UK Government – BEIS). When gas prices rise, electricity does too.

Expect:

• Higher day-ahead and baseload power prices
• Increased fixed-term contract offers
• More price volatility on flexible agreements

Could This Trigger Another Energy Crisis?

We’re not yet facing the kind of systemic disruption we saw during Russia’s invasion of Ukraine, but markets are nervous.

Key Risks to Watch:

• Iranian retaliation: If Iran strikes energy infrastructure or allies like Saudi Arabia become involved, prices could surge.
• Shipping disruption: Any incident in the Strait of Hormuz would have an immediate global impact.
• Extended gas outages: Prolonged shut-ins from the Eastern Med could tighten Europe’s LNG supply.

Economists are also warning of stagflation risks, where inflation rises while economic growth slows, particularly if oil remains above $85 and interest rates stay high (The Guardian).

What Should Your Business Do?

The situation is still unfolding, but the price signals are already here. If your business relies on predictable energy costs, now’s the time to act.

✅ Review Your Contract Strategy

If you’re on a flexible contract or approaching renewal within the next 6 months, speak to an energy advisor. Waiting for stability may mean missing the window to fix.

✅ Be Prepared to Act Quickly

Wholesale prices are changing daily. Ensure decision-makers are looped in and ready to approve new deals if needed.

✅ Audit Your Risk Profile

Review whether your business could handle further price shocks. A layered procurement strategy or a cap within a flexible deal may help balance risk and agility.

In Summary

• The Israel-Iran conflict has already pushed up oil and gas prices.
• Disruption in both the Gulf and the Mediterranean is affecting global supply confidence.
• UK electricity prices are rising in step with gas,  and business energy tariffs are following suit.
• There’s no supply emergency yet, but the risk is priced in. And that price could climb higher.

At Tritility, we help businesses navigate uncertain energy markets with clarity and confidence. If you want help understanding your options, from fixed tariffs to risk-managed flex deals, get in touch. We’re here to help you make informed decisions.