6Pre-AdvancedBusinessBusiness

UK Energy Suppliers Withdraw Fixed Deals Amid Iran Crisis

UK energy companies are pulling fixed-price tariffs from the market as the Iran conflict drives wholesale gas prices to their highest levels since 2023. With analysts warning that household bills could rise by 10% from July, consumers face growing uncertainty about the cost of heating and electricity in the months ahead.

2 min readLevel 6March 5, 2026

By Flalingo Editorial Team

Vocabulary

Study these words before reading the article. Click the audio button to hear pronunciation.

wholesale

/ˈhəʊlseɪl/

adjective

Relating to the sale of goods in large quantities to businesses, rather than directly to individual consumers.

“The company monitors wholesale energy prices closely to anticipate changes in production costs.”

tariff

/ˈtærɪf/

noun

A fixed price or rate charged for a service, such as energy supply, or a tax on imported goods.

“Households on a fixed tariff are protected from sudden price increases until their contract expires.”

volatility

/ˌvɒləˈtɪləti/

noun

The tendency for something, especially prices or markets, to change rapidly and unpredictably.

“Investors often seek safer assets during periods of high market volatility.”

escalating

/ˈeskəleɪtɪŋ/

adjective

Increasing rapidly in intensity, size, or seriousness.

“The escalating cost of raw materials forced the manufacturer to raise its prices.”

prolonged

/prəˈlɒŋd/

adjective

Continuing for a long time, longer than expected or desired.

“A prolonged supply chain disruption would have severe consequences for the retail sector.”

vulnerable

/ˈvʌlnərəbl/

adjective

Exposed to the possibility of being harmed or negatively affected by something.

“Small businesses are particularly vulnerable to sudden increases in operating costs.”

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Article

Click on any underlined word to see its definition. Highlighted words are from the vocabulary section.

UK energy suppliers have withdrawn more than half of their fixed-tariff deals from the market this week. The unprecedented move was triggered by a dramatic surge in wholesale gas prices. European benchmark gas prices had doubled within days, jumping from around €32 to over €60 per megawatt hour. This volatility stems from the escalating military conflict involving Iran, the United States, and Israel.

The crisis intensified after Iran's retaliatory strikes damaged critical energy infrastructure across the Gulf region. QatarEnergy, which supplies approximately 12 to 14 percent of Europe's liquefied natural gas imports, halted production. Iran has also threatened to close the Strait of Hormuz, through which roughly 20 percent of global oil passes. UK wholesale gas prices subsequently spiked by 93 percent in a single week, reaching 148 pence per therm.

Analysts at Cornwall Insight have forecast that the energy price cap could rise by 10 percent from July. The cap for April to June had already been set at £1,641, representing a 7 percent reduction. However, sustained wholesale price increases would feed into Ofgem's next regulatory decision in May. The Resolution Foundation warned that prolonged disruption could add approximately £500 to annual household energy bills.

Had European nations diversified their energy sources more aggressively, they might have been less vulnerable to this shock. EU gas storage currently stands at only around 30 percent capacity, well below previous years' levels. Goldman Sachs has modelled scenarios ranging from a quick resolution to prolonged disruption at €74 per megawatt hour. This crisis serves as a stark reminder that Europe remains dangerously exposed to volatile international energy markets.

Comprehension Quiz

Test your understanding of the article with these multiple-choice questions.

1
What is the main reason UK energy suppliers are removing fixed-price deals?
2
By how much did UK wholesale gas prices increase in one week?
3
What percentage of global oil passes through the Strait of Hormuz?
4
How much could annual household energy bills increase according to the Resolution Foundation?
5
What is the current level of EU gas storage capacity?

Discussion

Answer these comprehension questions about the article.

1
What caused UK energy suppliers to withdraw their fixed-tariff deals from the market?
2
How has the Iran conflict specifically affected wholesale gas prices in Europe?
3
Why does the closure of the Strait of Hormuz have such a significant impact on global energy markets?
4
What role does Ofgem's energy price cap play in protecting UK households from immediate price increases?
5
How might the current crisis compare to the energy crisis that followed Russia's invasion of Ukraine in 2022?

Further Discussion

Share your opinions on these open-ended questions.

1
If you were the CEO of a UK energy supplier, how would you balance protecting your customers with managing financial risk during this crisis?
2
Should governments invest more heavily in renewable energy to reduce dependence on volatile fossil fuel markets? What are the trade-offs?
3
How would you advise a household to manage their energy costs if they were currently on a variable-rate tariff?
4
In your opinion, what long-term strategies should European nations adopt to reduce their vulnerability to geopolitical energy shocks?
5
If you were an investor, would you view this crisis as an opportunity or a threat? Which sectors would you focus on and why?