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Prime Minister Benjamin Netanyahu said Thursday that Israel and the United States were “winning” the war against Iran, with the Islamic republic “decimated” and unable to enrich uranium or manufacture ballistic missiles. However, Tehran is pushing back in this escalating war of words, with Foreign Minister Abbas Araghchi insisting that Iran’s military strength remains fully intact and will not faulter in the event of further attacks.

Household energy bills in Great Britain could increase by more than £330 a year to almost £2,000 from this summer after the Iran war pushed the UK’s gas market past three-year highs.

A typical combined household gas and electricity bill is now forecast to reach £1,972 a year from July under the UK government’s quarterly price cap, according to analysis by the energy consultancy Cornwall Insight,.

The fresh forecast has soared above an estimate from two weeks ago when the consultants predicted, after only five days of war in the Middle East, that the price cap could climb to £1,800 a year from July, up from the £1,641 cap for April to June.

The current cap was set by Great Britain’s industry regulator, Ofgem, at £117 below the previous cap in a brief reprieve from rising bills for millions of households – but prices are expected to rise sharply from the summer.

The latest forecast for a 20% increase in household energy costs was fuelled by a rise in European gas prices this week after a significant escalation in the Middle East conflict during which some of the region’s most important infrastructure was targeted for the first time since the conflict began three weeks ago.

Gas prices in Europe rose 30% on Thursday after Qatar confirmed missiles had caused extensive damage at the world’s biggest processing facility for seaborne liquefied natural gas and that it could take up to five years to repair. Tankers of oil and gas from the Gulf remain unable to enter the global market via the strait of Hormuz, which is effectively under the control of Iran’s Islamic Revolutionary Guard Corps.

Europe’s gas markets eased on Friday, but prices remained twice as high since the start of the war. The market price for UK gas delivered next month also eased, down 2% to 153p a therm on Friday from highs of 180p on Thursday, but also remain almost double the level before the Iran war began.

British motorists also face higher energy costs at the pump. Petrol prices have rose by almost 8% in the last three weeks to 143.35p a litre as global oil prices climbed to three-and-a-half-year highs. Diesel prices are 15% higher at 163.73p a litre.

The international oil benchmark, Brent crude, traded at about $107 a barrel on Friday after falling from highs of $119 the day before. The global oil price remains almost 50% higher than before the conflict began.

Households are also facing higher UK mortgage rates even though the Bank of England left base rates on hold at 3.75% on Thursday.

The average two-year fixed mortgage rate has risen from 4.83% at the start of March to 5.35% on Friday, according to the data provider Moneyfacts. That increase will have added about an extra £900 a year to the cost of borrowing £250,000 over 25 years.

Moneyfacts calculated that if the Bank’s base rate rises to 4% or 4.25%, as market pricing predicts, the average interest on new mortgages could stabilise at about 5.50% to 5.75%.

That could add an extra £1,000 to £1,500 a year to the cost of borrowing £250,000 over 25 years, compared with rates at the beginning of March.

Adam French, the head of consumer finance at Moneyfacts, said: “Swap rates, which underpin mortgage pricing, have risen sharply following the decision to hold the base rate at 3.75%, with markets interpreting commentary from the Bank of England as leaving the door open to rate rises amid ‘Trumpflation’ fears.

“With two- and five-year swaps now sitting at their highest level in more than a year, lenders are once again facing higher funding costs, and this will feed through into mortgage pricing.”

Meanwhile, the risk of a steep increase in household energy costs emerged as the world’s energy watchdog urged global governments to consider Covid-style emergency measures to help reduce energy use.

The International Energy Agency said several governments were already considering policies to conserve energy. These include asking people to work from home where possible to reduce commuting and incentivising the use of public transport or sharing vehicles when travel is unavoidable.

The Paris-based agency has also suggested that governments could lower highway speed limits by at least 10km/h (6.2mph) to reduce fuel use for passenger vehicles and freight.

The IEA’s energy-saving measures focus primarily on road transport, which accounts for about 45% of the world’s oil demand. However, the agency has also set out plans to conserve liquefied petroleum gas in transport and heavy industry in developing countries where LPG is heavily used by households.