Ofgem July 2026 Price Cap Forecast Jumps to £1,972 as Middle East Conflict Hits Wholesale Gas

The April - June 2026 Ofgem price cap fell by £117 (6.6%) to £1,641 for a typical household paying by Direct Debit - the largest quarterly fall since 2023. But that relief looks set to be short-lived.

Cornwall Insight, widely regarded as the most reliable UK energy forecaster, has predicted the Q3 2026 cap will rise to approximately £1,972.53 - a jump of around £331 from the April level. EDF's forecast is £1,937, and E.ON has indicated £1,955. All three point to the same cause: wholesale gas prices spiking due to the Middle East conflict. Ofgem will confirm the July - September cap by 27 May 2026.

Why the April cap fell

Ofgem confirmed the current £1,641 cap on 25 February 2026. The fall was driven largely by the government scrapping the Energy Company Obligation (ECO) levy and moving green levies from energy bills to general taxation - saving a typical household around £150 per year from April. Policy costs fell by £130 for a typical Direct Debit customer. Wholesale costs also fell by £38, though this was partly offset by a £66 increase in network costs.

Why the July cap is forecast to rise sharply

Wholesale gas is the primary driver of UK energy prices. The Ofgem cap methodology uses average wholesale prices from an assessment window that runs through mid-May, so prices locked into the forward market before any easing of the Iran conflict will be reflected in the final announcement.

What it means for different customers

Customers on standard variable tariffs (SVTs) will see unit rates and standing charges change automatically with each cap period. Customers on fixed-rate deals are not affected by the cap during their contract term. Prepayment meter customers have a separate cap (£1,597 for April - June 2026), and those paying by standard credit (cash, cheque, quarterly Direct Debit) have a higher cap of £1,772.

Martin Lewis warned on 3 March 2026 that households on the price cap should "urgently" consider fixing. Since then, many cheap fixed deals have been pulled or repriced higher as suppliers respond to the wholesale spike.

What energy brokers should know

For business energy brokers, the wholesale volatility has a direct knock-on effect on non-domestic contracts, which are not covered by the Ofgem price cap. Commercial renewals signed in April - May 2026 are likely to reflect elevated wholesale curves. Brokers advising SMEs should highlight the contrast between the falling domestic cap (April) and the tightening commercial market.

Disclaimer

This article is for general information only and does not constitute financial advice. Energy tariffs and the Ofgem price cap are subject to change. All forecasts beyond 27 May 2026 are estimates based on current wholesale forward curves and could move materially before Ofgem's announcement.

FAQ

When is the July 2026 cap confirmed?
Ofgem announces the Q3 cap by 27 May 2026.

Should I fix my energy tariff?
Compare any fixed deal against the current £1,641 cap and any credible forecast. A fix only saves money if it is below the weighted average of the caps across the fix period. Many of the cheapest fixes were withdrawn in March 2026.

Does the price cap apply to businesses?
No - the Ofgem domestic price cap only applies to standard variable tariffs for households. Businesses negotiate commercial contracts, typically via brokers.