The escalating conflict in the Middle East threatens to hit UK households through higher fuel prices, rising inflation, and increased mortgage costs. Oil prices surged as much as 13% on Monday after shipping in the Strait of Hormuz was disrupted by retaliatory attacks, with Brent crude jumping to $82 a barrel before settling at $79.
The Strait, a crucial waterway carrying about 20% of the world's oil and gas, saw damage to tankers and disruptions to shipments. Over 200 vessels, including oil and gas tankers, have anchored outside the Strait, and three tankers were damaged in attacks on Sunday, killing one seafarer.
FairFuelUK warned that a sustained rise in Brent to $100 could add 10p to 20p per litre to petrol and diesel within weeks, based on historical patterns. The average price of petrol is currently 132.7p per litre, and diesel 142.4p, according to the AA.
Higher oil prices may feed through to wholesale energy costs, potentially reversing recent falls in household energy bills. Analysts also warned that rising inflation could delay the Bank of England from cutting interest rates, keeping mortgage costs higher for longer.
Adding to concerns, Saudi Arabia halted production at one of its largest oil refineries after a reported drone strike at the Aramco facility in Ras Tanura. The conflict's duration will determine whether oil prices retreat or climb further, with some experts warning of a return to $100 per barrel if the situation escalates.
