The money-saving expert said earlier in the week that he expected energy prices to drop soon in some rare ‘good news’ for hard-pressed Brits
Martin Lewis says that energy deals are already becoming more affordable following an agreement between the US and Iran. The money-saving expert stated earlier this week that he anticipated prices would fall soon in some rare ‘good news’ for financially stretched British households concerning energy costs.
This followed an announcement of an accord between the US and Iran to cease hostilities and reopen the crucial Strait of Hormuz. The memorandum of understanding, which is now active, was signed on Wednesday by Donald Trump and Iranian president Masoud Pezeshkian.
This has seen the cost of oil and natural gas decline, resulting in a reduction in energy prices. At the time of writing, Brent crude has fallen by approximately $7 a barrel and UK natural gas by roughly 14 per cent.
Mr Lewis confirmed that fixed energy deals were already being made available that were around 5 per cent more affordable. He stated: “Energy fixes have started to get cheaper, now 5% below April price cap.”
However, Mr Lewis cautioned earlier this week that people shouldn’t anticipate a substantial reduction in the next price cap, which runs from October to December.
The next price cap is expected to be announced on August 26 by energy regulator Ofgem. Approximately 60 per cent of households in England, Scotland, and Wales remain on a standard variable tariff, meaning their costs are governed by the price cap.
The current energy price cap is due to increase on July 1 by 13 per cent. This means that a home with typical energy consumption paying by direct debit will face charges of £1,862 annually.
That marks a rise of £221 compared to the previous price cap – and Mr Lewis cautioned it could climb even higher, despite the cessation of hostilities.
He stated: “The US and Iran signing a framework deal has pushed natural gas prices down. These wholesale prices are a key driver of UK gas and electricity bills. As the six-month graph shows, though, prices still have a long way to fall before returning to pre-conflict levels.
“The good news is that this could lead to slightly cheaper fixed tariffs being launched in the coming days. However, without substantial further drops the October price cap still looks likely to be significantly higher than it is today.”
He was subsequently questioned about why he believed the price cap would increase from October. He responded: “It’s the same reason the energy Price Cap HASN’T yet risen due to the Middle East crisis. It is time-lagged. So slow to rise, slow to fall.”