Energy markets ‘in turmoil’, says Octopus Energy boss

Energy markets are “in turmoil” in the face of the intensifying conflict in the Middle East, the boss of Octopus Energy has warned.

The UK’s largest household energy supplier said it has increased fixed-price tariffs and introduced exit fees for these tariffs in the face of soaring oil and gas prices.

It comes as a raft of other major suppliers have pulled fixed-price tariff deals completely.

In the week since attacks first started between Iran and US-Israeli forces, the number of fixed deals available has more than halved, according to data from Uswitch.

Remaining fixed deals, which are much more closely linked to wholesale prices than variable deals, have seen price increases.

Most UK households are on variable deals which are protected by the energy price cap.

The latest agreed energy price cap means that typical bills will actually fall in April, but experts have predicted that they are likely to rise by around 10% from July, particularly due to higher gas prices.

Greg Jackson, chief executive of Octopus Energy, told Times Radio the company has to pass on some increases in wholesale energy prices to fixed-rate customers.

He said: “Fixed tariffs are based on the fact the day you want to take out a fixed tariff, the energy company goes to the wholesale market and buys a year’s worth of energy for you, and because the wholesale market are now reflecting at least some of the cost increases from the effects of the war in the Middle East, new fixed tariffs are then higher.

“Some companies won’t offer them at all because they are not confident in being able to lock in those prices a year in advance.

“Where you are seeing fixed tariffs they are now typically a hundred pounds a year more expensive than a year before the conflict.”

Octopus has also introduced an exit fee for customers seeking to leave these deals since the conflict began, but Mr Jackson stressed that many other suppliers already had these in place.

He added: “I am keeping a very close eye on the situation.

“In energy terms, Iran has effectively closed the Strait of Hormuz, which transports 20% of the world’s oil and gas supplies, and Qatar has said it cannot honour its contracts to deliver its gas, so the energy markets are in a state of turmoil.

“The wholesale price of gas has roughly doubled since a week ago.”