Might they currently be at the lowest point for several years?
Some oil and gas analysts predict that crude oil prices will climb over US$250 per barrel by this time next year i.e. by the summer of 2026.
Oilprice.com take a more conservative view predicting that prices might increase to US$120 per barrel from a current level of between US$77 and 78 per barrel.
This will still be a significant increase.
How will this increase affect commercial electricity and gas prices?
A small proportion of total UK oil imports is from the Middle East and the UK can import LNG (Liquified Natural Gas) from the USA or Qatar if there is a shortage of oil due to an escalation of the Israel – Iran conflict.
Supply from USA, Brazil, Venezuela and from markets such as Azerbaijan may compensate for Middle East supply disruption.
However, 20% of global oil passes through the Straits of Hormuz, so this in itself will most likely have an impact on UK prices and Qatar LNG imports.
The Labour government’s admission that fossil fuel prices are cheaper than renewable energy prices may cease to be true in the future.
Oil traders and speculators are likely to push prices and risk premiums will grow causing a significant knock on effect
Historically, UK inflation has increased with higher global oil prices. A knock on effect on commercial electricity and gas prices seems likely.
Nevertheless, there are unlikely to be blackouts like in Spain earlier in the year as the UK Winter buffer is increasing to nearly 7 GW and the Greenlink electricity interconnect between Wales and Ireland will relieve supply pressure.
Might Renewables negate energy instability soon?
Although renewables are increasingly contributing to UK Energy production, self-sufficiency is unlikely to occur any time before 2035;
2050 is the UK government’s net zero target.
In short, we still have more than 10 years of probable energy instability and fossil fuel reliance before renewable energy power despite Hinckley C and Sizewell nuclear power coming on stream in before then.
The NGED (National Grid Electricity Distribution) needs to become more flexible and agile so that renewable energy producers can connect more easily and are incentivised and rewarded accordingly.
This is happening too slowly.
Major and rapid advancements of open data and modelling tools are required.
Several reliable sources including Reuters concur that :-
Offshore Wind capacity could triple by 2035 creating 10,000 new jobs and £25 billion in new investment.
Marine (Wave and Tide) energy totally 36 GW capacity and creating 90,000 potential jobs by 2050 may contribute as much as £50 billion to the UK economy.
Solar capacity continues to expand despite being slowed by poor NGED connectivity.
Hydrogen energy technology is being embraced very slowly
Fusion technology is being serious tested on a 350 MW site in Tennessee, USA by Princetown Plasma Physics and Westinghouse
Hydrogen and Fusion energy is unlikely to become mainstream much before 2060 or even 2070
So what about the next One to Five years?
Commercial high energy using businesses are more preoccupied for the next few years rather than in 10 years or more.
The ripple effect of crude oil prices takes time to affect gas prices , although gas prices increased by 2.7% within one week after the Israeli air strikes on Iran.
Electricity prices tend to be a little less reliant on crude oil prices, however energy companies will always build in safeguard margins on wholesale prices.
We need to still bear in mind that gas is still a major source of electricity generation.
According to the National Grid ESO team, gas made up about 30% in 2024, compared with 34% in 2023 . In 2025, it is predicted to be nearer 27.5%.
For political and regulatory reasons, the 800-1000% price increases that resulted in the Russian invasion of Ukraine in February 2022 are unlikely to be repeated.
Nevertheless, TFocus Energy recommends commercial energy users to lock in current prices in the coming weeks and preferably on a two year contract.
The TFocus team can shop around and find the best possible rates for commercial users from 10 or more energy providers.
We always ensure that you contract directly with the most appropriate energy supplier; TFocus Energy as an ethical energy broker will transparently make a small mutually agreed mark up and offer a quarterly review, so that your demands are always met.