Convenience retailers are facing renewed uncertainty over energy costs as wholesale prices rise amid conflict in the Middle East, but existing fixed-rate contracts are helping to keep panic at bay.
Energy market volatility has intensified following disruption to shipping routes in the Strait of Hormuz, which handles around a fifth of global oil and gas supplies.
According to energy consultancy Consultus International, the wholesale price of gas and electricity has risen by 67% and 39% respectively over the past week, which could impact retailers taking out new fixed contracts from 1 April.
“Part of the reason why the increase in price has been so sudden and sharp is largely because there’s still, even now, quite a lot of uncertainty on just how long this is going to last,” Consultus International head of risk assessment Matt Hopkins told The Grocer.
Premier retailer Faraz Iqbal said: “I know of some retailers who are looking for renewals and prices are higher than expected.”
Many convenience retailers, however, are unlikely to feel the immediate impact as they remain locked into existing fixed-rate deals, with some contracts running for another year or more.
But while US president Donald Trump has said the Iran war “will be over very soon”, Hopkins said volatile pricing was likely to continue for a couple more weeks.
He advised retailers due for renewal soon to still take out fixed-rate contracts, but on a shorter-term basis, as it was likely energy bills would return to more normal levels by the middle to latter part of 2026.
“What we find in energy markets is that prices are quick to go up and slower to come back down,” he said.
He added that retailers should avoid out-of-contract rates as they are “extremely expensive”.
“It’s very easy to react to the headlines and panic,” he said. “The key thing is to be clear what cost they could absorb and what cost is unacceptable. That will help determine the level of risk they want to take in the marketplace.”
The Federation of Independent Retailers is advising retailers to consult with energy experts as the market remains volatile.
National president Hetal Patel said: “The Fed exists to help independent retailers make money, save money and make business easier. As energy markets are currently so unpredictable, the Fed is urging members to speak to our business partners Assured Energy and UAC about their business energy contracts.”
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