Britain's energy price cap will increase by 13% in July.

Analysts at Cornwall Insight announced on Tuesday that the energy price cap in Britain is expected to increase by approximately 13% in July compared to current levels.

Starting in July, energy bills for an average dual-fuel household are projected to rise by £209 ($280), bringing the annual cost to £1,850. This new cap indicates a 13% rise from the current annual bill of £1,641.

The primary factor driving this increase is the surge in wholesale prices, which rose in February and March due to missile strikes by the U.S. and Israel on Iran, followed by Iranian retaliations that damaged Gulf energy infrastructure and led to the closure of the Strait of Hormuz—a vital route for about 20% of global oil and liquefied natural gas.

Even though a temporary ceasefire has eased market tensions, wholesale prices have remained high.

Wholesale energy prices are the most significant contributor to Ofgem's domestic price cap in the UK, which is recalculated quarterly based on a formula that also incorporates suppliers' network costs and environmental and social levies.

According to the analysts from Cornwall Insight, there is heightened concern for October when demand is likely to increase again, and current predictions suggest a cap similar to July's. They noted that while the October cap will depend on the developments in the Middle East conflict, even if it were resolved immediately, the physical destruction of infrastructure and the lasting impact of disrupted supply make a return to April’s price cap levels in the autumn improbable.