Rachel Reeves is reportedly preparing to abandon a planned increase in fuel duty, responding to soaring costs linked to the ongoing conflict in the Middle East. The Chancellor had previously extended the fuel duty reduction until August 2026, but faced pressure to maintain it following the closure of the Strait of Hormuz.
Blockade Impact
Iran's blockade of the Strait of Hormuz in March, a crucial oil route, has caused global fuel prices to surge, with petrol reaching 157.99p per litre. Abandoning the planned fuel duty rise is expected to cost £2.4 billion and is anticipated to be announced on Thursday.
Political Context
This decision comes amidst political turmoil for Sir Keir Starmer, who faces a leadership challenge after recent local election results, despite his plans for a multinational mission to reopen the Strait of Hormuz.
