Middle East Conflict and it's
impact on UK Energy Prices

Recent escalation in the Middle East has once again highlighted how global events can quickly influence UK energy markets. While the UK produces some of its own gas and electricity, prices are ultimately determined by global supply and demand. As a result, geopolitical events in major energy-producing regions can have a direct impact on wholesale prices.

Why the Middle East matters to global energy supply

Tensions in the region escalated on 28^th February 2026, raising concerns about the potential impact on global oil and gas supply.

The Middle East remains one of the world’s most important energy producing regions. Countries including Saudi Arabia, Qatar, the United Arab Emirates and Iran collectively account for a significant share of global oil and gas exports.

A key strategic location is the Strait of Hormuz, a narrow shipping route between Iran and Oman through which around one fifth of global oil and Liquefied Natural Gas (LNG) shipments pass. Any threat to shipping through this route can have an immediate impact on global energy markets.

Even where no direct disruption occurs, markets often react quickly to geopolitical risk by pricing in potential supply shortages.

LNG and the UK’s changing energy mix

The UK’s exposure to global gas markets has increased in recent years.

Following the loss of most Russian pipeline gas to Europe after 2022, LNG has become increasingly important for meeting European demand. LNG allows gas to be transported globally by ship, with cargoes moving to whichever markets offer the strongest prices.

Since much of this LNG passes through the Strait of Hormuz, instability in the region can create immediate concerns about global gas supply.  As Europe and Asia import large amounts of LNG any disruption to supply can influence prices including those in the UK.

Impact on UK wholesale prices

Since the escalation began wholesale markets have reacted quickly.

UK gas prices rose sharply as traders priced in the potential for disruption to global supply routes. In the days following the escalation, near term wholesale gas prices increased by approximately 40–50%, with electricity markets also rising due to their strong link to gas generation. These movements reflect how quickly geopolitical developments can influence wholesale pricing.

What this means for WME customers

While headlines can appear concerning, the impact on many WME customers will be limited in the short term.

West Mercia Energy operates a fully flexible procurement strategy, purchasing energy incrementally, over a long buying window rather than buying the entire requirement at a single point in the market.

This approach spreads purchasing risk and helps mitigate the impact of sudden market shocks such as the current crises.

Given a significant proportion of energy for the 2026/27 supply year had already been secured before this escalation, recent price movements are expected to have minimal impact on that delivery period.

The outlook for 2027/28 will depend on how the geopolitical landscape evolves over the coming months and the existing contractual position of customers.

WME can only manage volumes for customers where we have contractual commitment. Consequently, those without contracts extending past March 27 face greater risk, since WME cannot implement protective measures for them, until a contract is in place.

The importance of risk-managed procurement

Events like this demonstrate the value of risk-managed energy procurement strategies across the public sector.

By purchasing energy gradually and monitoring markets closely, WME’s flexible procurement approach helps protect customers from sudden market shocks while still allowing opportunities to capture favourable prices over time.

While geopolitical developments will always influence global energy markets, spreading purchases and maintaining a long-term strategy helps reduce exposure to exactly these kinds of events.

WME will continue to monitor the situation closely and provide further market updates as conditions develop.

For further information, please contact: customerservices@westmerciaenergy.co.uk