Consumers will see the fuel portion of their electricity bills fall slightly next month — despite rocketing global oil prices.

The war involving the United States, Israel and Iran — and the resulting halt to shipping through the Strait of Hormuz — has sparked a more than 40 per cent spike in the price of crude oil, the base ingredient of the heavy oil and diesel that Belco burns to fire its generators.

However, there will be no inflationary impact visible on Belco bills next month. The fuel adjustment rate, which makes up 30 per cent of the average customer’s total energy bill, will fall fractionally on April 1 from 13.7999 cents per kilowatt hour to 13.784 cents.

Joe Barbosa, senior finance director at Belco, explained in an opinion article for The Royal Gazette that the Government’s anticipated elimination of its fuel tax is the primary driver of this reduction.

“Those savings more than offset the current rise in market prices, meaning customers have benefited from reductions in the FAR since the fourth quarter of 2025,” Mr Barbosa said.

David Burt, the Premier and Minister of Finance, proposed in his Budget Statement last month that customs duty on fuel for electricity generation would be cut to zero.

Mr Barbosa said a prolonged war could lead to increases in the FAR beyond April.

“Depending on how long the conflict continues and what happens to oil prices over the coming months, an adjustment to the FAR may be necessary in the second half of this year,” Mr Barbosa said.

Belco manages price volatility by buying much of its future fuel needs at fixed prices.

“When oil prices spike sharply, as they have now, the impact is cushioned and delayed rather than immediate,” Mr Barbosa said.

“A short-term elevation in oil prices of one to three months will have a limited impact on the current FAR. However a sustained increase beyond three months will have a greater effect on customer bills.”

Mr Barbosa added that Belco receives between five and seven fuel shipments on average per year.

“The total cost of each shipment reflects the entire end-to-end expense of procuring and delivering fuel, not just the purchase price of the oil itself, but blending, shipping, handling, storage and pipeline delivery from Ferry Reach to Belco’s central plant in Pembroke.”

Figures released yesterday by the Department of Statistics showed that Bermuda’s inflation rate was 2.4 per cent last December, as measured by the Consumer Price Index. Average inflation for the full year of 2025 was 2 per cent, up from 1.9 per cent in 2024.

Brent crude, the global pricing benchmark for crude oil, was trading above $109 a barrel late yesterday afternoon, up 45 per cent since the war started on February 28.

About one fifth of the world’s oil supply is shipped through the Strait of Hormuz, a supply that has effectively been halted by Iran’s closure of the channel.

Drivers have felt an immediate impact in the US, where the price of petrol has soared to $3.84 a gallon, up from $2.98 when the initial strikes on Iran were launched.

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