Household energy bills could increase by £288-a-year in July as soaring wholesale costs caused by the Iran war are set to push up Ofgem’s price cap, according to the latest forecasts.

Analysts Cornwall Insight said its prediction for the watchdog’s price cap from July to September now stands at £1,929 for a typical dual fuel household – an increase of £288 or 18% on April’s cap. But this marks a slight fall from its forecast earlier this month, which had seen the cap rising to £1,973 in July. It said this was due to a “partial steadying in wholesale markets after a pause in energy infrastructure strikes and signals of a potential ceasefire in the Middle East conflict”.

However, the company warned a rise in the cap in July was “effectively unavoidable” with rocketing wholesale prices over March now locked into the calculation and little chance that they will fall below pre-war levels in the coming weeks.

The price most households pay for energy under the cap fall by 7% from April 1, or £117 a year to £1,641, driven by the Government’s promise to cut bills by an average of £150 by removing green subsidies.

The possibility of a sharp rise in gas and electricity bills when the price cap is updated in July has led the Government to say it is considering extra targeted support as part of its contingency planning. Ofgem is due to announce the new price cap level by 27 May.

Craig Lowrey, principal consultant at Cornwall Insight, said: “A rise in July is pretty much unavoidable, but how high prices go remains to be seen. There is some relief in the timing, summer is when energy demand is at its lowest, which should soften the impact on household energy expenditure.

“If higher wholesale prices continue, it will be the effects on the October cap that have the most impact, and that is when the question of government support for households is likely to be revisited.”

Minister for energy consumers, Martin McCluskey, said: “Tackling the affordability crisis is our number one priority and I know many families will be thinking about how events in the Middle East might impact the cost of living at home.

“We will continue to fight people’s corner through this crisis and, as the Energy Secretary has said, if it’s necessary to intervene, we will.”

Restrictions on shipping through the Strait of Hormuz, combined with recent damage to major gas infrastructure, have pushed wholesale energy prices higher and increased the financial strain on households.

Most domestic customers are shielded from the full impact by Ofgem’s price cap, but those relying on heat networks do not have this protection and may face steep cost increases in the months ahead.

Because heat‑network users cannot switch suppliers in response to rising prices, they are particularly exposed to volatility in the energy market.