We covered the mechanics in our previous deep dive: the Strait of Hormuz carries roughly 20 percent of the world's oil, 84 percent of which goes to Asia. The UK imports almost none of it directly. The US gets maybe 2.7 percent of its consumption through that route. Yet both countries have seen fuel prices surge by 30 to 80 percent since the war began on 28 February 2026.
The markets, we were told, had spoken.
But markets do not just respond to physical reality. They respond to fear, speculation and the expectations of traders who are betting on what comes next. There is now a growing body of evidence suggesting that the price of fuel in the UK and US reflects something more than a genuine supply crisis — and that the people who benefit most from keeping prices high have very little interest in changing the narrative.
The fear premium no one talks about
Brent crude peaked at $126 a barrel in March 2026. At the time of writing it is trading at around $98 to $103. Before the war it was around $60.
The physical shortfall is real. The IEA estimates a daily global shortfall of around 8 million barrels even accounting for emergency releases and pipeline diversions. That justifies higher prices. But oil traders at CNBC's CERAWeek conference in Houston acknowledged something important: the "paper" price, the price set in futures markets and the "physical" price of actual oil actually being delivered have diverged sharply. Ben Cahill of the University of Texas at Austin told CNBC that the talk of the conference was precisely this gap, with the physical market tightening far slower than futures prices suggested.
Put plainly: the markets priced in apocalypse, and the apocalypse has not quite arrived yet. The gap between the fear and the reality is profit for those positioned correctly.
Then there is this. A Financial Times investigation found that $580 million worth of bets on falling oil prices were placed just 15 minutes before Trump published his statement on 23 March 2026 postponing attacks on Iran for talks the announcement that briefly sent oil prices down. The resulting calls for investigation into insider trading remain unresolved.
The government windfall
Here is the part the official narrative skips.
In the UK, fuel duty stands at 52.95 pence per litre. On top of that, VAT is applied to the entire pump price including the duty element. According to the RAC Foundation, the Treasury currently receives roughly half of everything you pay at the forecourt. When prices go up, the government's take goes up with them. Every penny on the price of a litre adds to Treasury revenue automatically, without a single vote in Parliament.
The RAC Foundation calculated that between 28 February and the middle of March alone, UK drivers paid £307 million more at the pumps than they would have at prices before the war. That number has grown since. The Treasury did not cause the price rise. But it is not losing money on it either.
Meanwhile, analysis published by Labour Hub shows that 12 of the world's largest energy companies added more than £233 billion in combined market value in a single month. In the EU, a Greenpeace report estimated oil companies were making €81.4 million in extra profits every single day through March. Energy company bosses saw personal fortunes surge by millions.
As Tax Justice UK's Caitlin Boswell put it: "Different parts of the economy are set to make enormous paydays as they spot opportunities."
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What governments could do but are not doing
If the price crisis were genuinely about supply, governments had tools available on day one.
The simplest: freeze fuel duty. If 52.95 pence per litre of every sale goes to the Treasury at £1.50 a litre and then again at £2.00 a litre, a temporary duty freeze would directly cut the price at the pump without touching the global oil market at all. Several countries did this during the 2022 energy crisis following Russia's invasion of Ukraine. The UK did not move swiftly on it this time.
The second tool: emergency windfall taxes on energy company profits, recycled directly as fuel subsidies. The oil companies profiting from a war none of their customers wanted are not hard to identify.
The third: release strategic reserves faster. The IEA coordinated a release of 400 million barrels in March, the largest in history. It helped. But governments with strategic reserves the US holds around 350 million barrels could have moved sooner and further.
None of these levers require the strait to reopen. All of them reduce the price you pay without waiting for diplomacy to work.
The question nobody in government is answering
UK Chancellor Rachel Reeves called the war "a folly" in her strongest criticism of the Trump administration to date, NPR reports. The Resolution Foundation calculated that UK households will be around $500 worse off this year as a direct result of the conflict. US Treasury Secretary Scott Bessent acknowledged that US allies were going to suffer economic pain but said it was worth it.
Worth it to whom, exactly?
That is not a conspiracy theory. It is an accounting question. When oil producers, commodity traders, energy company shareholders and governments with tax structure based on percentages structures all make more money when oil prices are high, and when the official narrative directs public anger exclusively at Iran and the blockade, it is worth noting that the people setting that narrative are not the ones paying it at the pump.
Markets can decide to price oil at $60 a barrel. They did so as recently as January 2026. The physical reality of the strait's closure justifies some increase. Whether it justifies a 60 to 70 percent increase for countries that barely buy Gulf crude is a different question and one that is not being asked loudly enough.
Sources:
- RAC Foundation — War with Iran has already cost UK drivers hundreds of millions
- House of Commons Library — Economic update: Middle East conflict and the UK economy
- NPR — As fuel prices continue to rise, Iran war drives Europe toward new crisis
- Labour Hub — As oil giants reap super profits from war on Iran
- CNBC — Iran war-hit oil prices will soon rise if Hormuz stays shut
- Wikipedia — Economic impact of the 2026 Iran war
- GaukMotorBuzz — Why Are UK and US Fuel Prices Surging?
