Drivers in the UK are being warned of increasing petrol prices if the conflict in the Middle East continues. Brent crude has already spiked more than 9% since the first strikes on Iran on Saturday (February 28) with further hikes forecast if the situation escalates.
The region supplies a large amount of the world's crude oil and controls maritime routes such as the Strait of Hormuz. According to Samuel Mather-Holgate, Managing Director and Independent Financial Advisor (IFA) at Swindon-based Mather and Murray Financial, petrol in the UK could exceed £2 per litre if the conflict continues. He explained that energy markets are "extremely sensitive" to geopolitical shocks, especially when major oil-producing regions are involved.
The expert said: "If this conflict becomes drawn out, the UK could see petrol pump prices comfortably exceed £2 per litre, and potentially move significantly beyond that level if supply routes are materially disrupted.
"In a worst-case scenario involving sustained instability around critical transport channels such as the Strait of Hormuz, where a substantial portion of the world’s oil passes each day, prices could climb sharply and remain elevated for months."
He continued: "This will lead to 'duration risk' – as the longer it continues, the higher prices will go. That would place enormous strain on household budgets, transport costs and wider inflation."
Iran previously warned that vessels will not be able to pass through the Strait of Hormuz if the conflict continues. Around 20% of the world's oil and gas is currently shipped through the waterway.
Mr Mather-Holgate said that oil demand across the world is currently as "historically high levels". As the conflict in the Middle East has led to supply uncertainty, Brits should expect sustained price increases.
He added: "For UK drivers, the implications are stark. Fuel is a core input into almost every part of the economy, from commuting and logistics to food distribution. If pump prices move well beyond £2 per litre, the knock-on effect would not just hit motorists directly, but also filter into broader inflation.
"And that could mean further interest rate cuts end up on ice, at least for now, which is bad news for mortgage borrowers. Unless tensions cool rapidly and supply confidence returns, the pressure on fuel prices may only just be starting."
The AA previously warned that pump prices have risen over the past week due to the conflict between the US and Iran. The breakdown service advises drivers to fill up as soon as possible as prices could increase even more.
