UK wholesale gas tops 200p a therm for first time since end of 2022

Oil reached $105 a barrel amid signs that the conflict between the United States and Iran in the Gulf would not be resolved quickly, BBC News reported. The cost of crude oil and gas had risen sharply as the fighting intensified in recent days, reviving fears that inflation could accelerate. Brent crude moved back above $100 a barrel on Wednesday and has continued to climb.

The war has effectively closed the Strait of Hormuz, preventing oil and gas supplies from the Gulf from reaching global markets. Concerns also grew after Iran-aligned Houthi forces were reported to have seized Yemen’s port of Mocha, a key Red Sea port. The BBC said the development could elevate fears of further shipping disruptions.

UK wholesale natural gas rose above 200p a therm for the first time since the end of 2022. European gas storage levels are much lower than normal for the time of year, and the need to fill reserves ahead of winter has helped push prices higher.

UK consumers are protected from short-term wholesale gas price spikes by Ofgem’s price cap. Households could nevertheless face steeper bills if elevated prices persist over an extended period. The cap is already scheduled to rise by 3.6% at the start of October, with the next change after that coming in January.

Worries over higher inflation have, in turn, helped push UK government bond yields to their highest levels in decades, BBC News reported. The report linked higher energy costs and fears of an inflation spike to rising government bond yields around the world. UK 10-year bond yields reached their highest level since 2007, while yields on 20- and 30-year bonds reached levels not seen since 1998.

Higher yields imply more expensive borrowing for the UK government at a time when public finances are under pressure. The BBC noted that higher yields could also affect households because they influence the rates paid by consumers for some financial products, including fixed-rate mortgages.

Speaking at a Republican Party convention in Texas on Wednesday, President Trump said he did not think the fighting would end until after the US mid-term elections in November.