𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Families face a fresh cost-of-living nightmare if the Iran war spirals into a regional conflict, Rachel Reeves has been warned. Ships were attacked as they transited through the Strait of Hormuz on Sunday, igniting fears of soaring oil, electricity, transport and food prices as tankers were engulfed in flames.

Millions of Britons were warned petrol prices could hit a record high of more than 190p per litre if the Strait of Hormuz, which 20% of oil supplies pass through, becomes even more contested and dangerous. Oil prices could surge to $100 a barrel, traders have predicted. Iran’s Revolutionary Guards claimed they struck three American and British oil tankers in a missile attack on Sunday. And shipping companies ordered sailors to avoid the critical waterway, instead redirecting them around the Cape of Good Hope, while others dropped anchor off the coast of Oman. One crew member was killed after the MKD VYOM tanker was struck off Oman, bosses revealed.

Shadow Business Secretary Andrew Griffith told the Daily Express: “Any serious disruption to the Strait of Hormuz, an invaluable global oil trading passage in the Persian Gulf, would send prices surging. The impact would be immediate: higher petrol and diesel costs, rising transport expenses, and renewed inflationary pressure across the economy. The Chancellor should reconsider her plans to increase fuel duty from September. Raising taxes on motorists at a moment when oil prices could and a likely spike would compound the pressure on families and businesses.

“Transport costs feed into everything from food distribution to construction. Suspending or cancelling the planned rise would provide immediate and crucial relief and signal that the Government understands the scale of the risk.”

Howard Cox, Founder of FairFuelUK, says: “In light of the ongoing crisis in the Middle East, Rachel Reeves must declare in her Spring Statement that Fuel Duty will remain frozen for the duration of her Parliament and cancel any planned increases in the Autumn Budget. This move would not only be economically prudent—stimulating GDP growth and alleviating inflationary pressure—but it would also provide some much-needed political relief to this government, known for its frequent U-turns.

“The critical point for all UK politicians to consider is that had the North Sea oil and gas fields been permitted to ‘drill-baby-drill’, our pump prices would not, once again, be so vulnerable in the long term to any conflict in the Middle East.”

Labour’s Emily Thornberry, the chairwoman of the influential Foreign Affairs Select Committee, said: “A war with Iran, which has the potential to spread across The Gulf is not something we in Britain will be able to ignore.

“Many of our armed forces are stationed there, alongside increasing numbers of other Brits who live, work and visit the area.

“And bear in mind that if our imports need to take a longer route away from The Gulf, they will get more expensive, as well as oil prices which are very likely to go up.”

The Strait of Hormuz sees between 15 million barrels of crude oil pass through its waters each day, amounting to around a third of the global crude trade.

Qatar, on the Persian Gulf, is one of the world’s biggest exporters of liquified natural gas and closing the strait could also impact these shipments.

Disruptions in the liquid natural gas markets could drive up gas prices are closely linked to the price of electricity, traders said. Edmund King, President of the AA, said: “The turmoil and bombing across the Middle East will surely be a catalyst to disrupt oil distribution globally, which will inevitably lead to price hikes. So, drivers beware, within the next 10 to 12 days we could be seeing record prices at the pumps.”

Downing Street said the Prime Minister had spoken to the kings of Jordan and Bahrain as well as the crown prince of Kuwait on Sunday as strikes continued across the region. Explosions have been heard in multiple Gulf states as Iran vowed to carry out its “most intense operation” ever in retaliation for the killing of Supreme Leader Ayatollah Ali Khamenei.

The death of 86-year-old Mr Khamenei, who ruled Iran for almost 37 years before he was killed in a US-Israeli strike on Saturday morning, has thrown his country’s future into doubt and threatened to destabilise the wider region.

Donald Trump said Iran has agreed to talks to end the war after US airstrikes killed the Supreme Leader. The US President said: “They want to talk, and I have agreed to talk, so I will be talking to them. They should have done it sooner. They should have given what ‌was very ‌practical ⁠and easy to do sooner. They waited too long.”

The US military said it used B-2 stealth bombers to attack Iran’s ballistic missile facilities with 2,000-lb bombs. The same bombers were used in the attack on Iran’s nuclear facilities last June.

Jorge Leon, senior vice president and head of geopolitical analysis at energy intelligence firm Rystad Energy, said: “A higher electricity price will feed through the global economy, and, in particular in the UK, (lead to) higher inflation.

“We have a direct effect – which is higher prices at the pump and higher electricity bills, but also a secondary effect, which is things will get more expensive because inflation might increase.”

The actions of the Iranian government over the coming days would have a “massive impact” on this, he said, adding: “The initial signals that we are seeing is that they are taking quite a hawkish approach at the moment.

“They keep attacking the rest of the GCC (Gulf Cooperation Council) countries, so we don’t think (de-escalation) will happen, or, at least, it’s not happening now.”

Rachel Reeves will deliver her Spring Statement on Tuesday, and the Chancellor had been hoping it will be a low-key affair.

But Defence Secretary John Healey confirmed Ms Reeves is watching the oil markets “very closely” amid fears of another surge in prices.

He said: “She is watching very closely, as you’d expect, any movement in the oil prices. We’ve seen before when Russians invaded Ukraine that the price of war is so much greater than the cost of deterrents. We saw double digit
inflation. We are still paying higher energy and fuel prices now after that invasion.”