Oil prices have soared to their highest level since 2022 as President Donald Trump appears to be preparing for an escalation of the Iran war.
The cost of benchmark Brent crude soared past £94 a barrel, up nearly 7%, reaching a high not seen since Russia’s invasion of Ukraine in 2022.
Hopes of a resolution to the war and the reopening of the crucial Strait of Hormuz shipping route have been dashed as peace talks between the US and Iran break down.
Trump has rejected Iran’s proposals to reopen the Strait of Hormuz and is preparing to launch a series of strikes on Iran, which would bring an end to a fragile ceasefire.
The surge in oil prices will lead to further fears over price rises at petrol pumps, with worries that the global energy shock will lead to a sharp increase in UK inflation.
Could this lead to a recession in the UK?
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In March, Larry Fink told the BBC that if the conflict isn’t settled, there could be ‘years’ of high prices and a ‘stark and steep recession’.
‘Rising energy prices are a very regressive tax. It affects the poor more than the wealthy,’ he said.
Thomas Sampson, associate professor of Economics at the London School of Economics (LSE), told Metro that while it is possible for a recession to occur, it will depend on the severity and duration of the oil shock.
Weeks of intensifying attacks in the Middle East, disruption to energy production, and shipping delays in the Strait of Hormuz are all likely to have significant impacts on the global economy.
In early March, when oil surged in price, motorists were urged to stop ‘non-essential journeys’ to save money.
President of the AA, Edmund King, is urging Brits to make fewer journeys to save money, and suggested motorists should change their driving style to be more fuel efficient.
King said: ‘The longer this conflict goes on, the more effect it will have on the cost of oil. Any time Brent Crude passes 100 dollars per barrel raises concern across the markets, for the haulage industry and drivers.
‘There will be gradual increases in pump prices, but this shouldn’t happen overnight as fuel has been purchased at previous prices.’
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