Ukraine crisis could push UK energy bills above £3,000 for millions, expert warns

Energy bills could soar as high as £3,000 a year following Russia’s invasion of Ukraine, analysts have warned.

Bills in the UK are already on the rise and are set to climb by £693 to £1,971 in April, after regulator Ofgem announced in February it was lifting the price cap in April.

Analysts were already worried even worse might be in store for October, when the cap is due to be reviewed again.

Now, following Russia’s move to invade Ukraine, there are fears an increase in the energy price cap could be even more extreme.

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This is in part due to fears that the Russian-Ukrainian war could result in a fuel shortage, as western sanctions on Russia may push President Vladimir Putin to retaliate and "weaponise" his resources, constricting supplies to Europe.

Should Mr Putin do this, it would drive up wholesale prices worldwide since Russia is the world’s largest natural gas exporter.

This could also have an effect on the UK, even though the UK gets little of its gas directly from Russia.

On Thursday, the UK price of natural gas for next-day delivery rose by as much as 73 per cent and although the price surge dropped somewhat, prices were still 42 per cent up on already-elevated levels at the end of the day.

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Oil prices have also risen following Russia’s invasion of Ukraine, with oil prices topping $100 (about £75) per barrel for the first time since 2014.

Investec analyst Martin Young said in a report published on Thursday suggesting that bills could soar past £3,000.

Mr Young said this would be “devastating for UK households” and voiced concerns that it might lead to “an ‘eat or heat’ dilemma.”

He added: "The political crisis will intensify, and the government will need go further than current measures, and be more targeted.

“Prices have risen markedly over the past couple of days for all periods captured in the commodity price component of the tariff cap calculations.

“This could have serious implications for the level of the default tariff cap for October, with our ‘marked to market’ estimate having risen to over £3,000 for dual-fuel.”

Boris Johnson acknowledged the impact that the market turbulence has been having on UK consumers when he addressed the House of Commons.

"The government will do everything possible to save our people from the repercussions for the cost of living," the prime minister said.

Soaring energy prices are one of the key factors behind Britain’s current rise in the cost of living. Inflation has hit a three-decade high of 5.5 per cent and prompted the Bank of England to forecast that it will top 7 per cent.