Martin Lewis has drawn a “depressing” parallel between the height of the Russia-Ukraine war and the ongoing conflict in the Middle East. The founder of MoneySavingExpert.com warned that crude oil prices have already risen to just below their level in mid-2022, with the cost of natural gas also below the previous peak but rapidly growing. The escalating conflict between Iran, the US and Israel has caused oil and gas prices around the world to climb higher amid supply disruption linked to Iran blocking commercial ships from passing through the Strait of Hormuz, a crucial shipping route.
Mr Lewis said rising oil prices could impact “petrol costs, heating costs and inflationary costs to food, as the cost of transporting anything increases”. He added that higher natural gas prices could also cause UK electricity prices to spike, but said the extent of the impact would depend on how long the conflict continues.
The cost of Brent crude oil, a global benchmark for oil produced from the North Sea, shot past $100 (£75) this week, a high last seen after Russia‘s illegal invasion of Ukraine in February 2022.
Natural gas prices also soared after Qatar’s state-backed energy company QatarEnergy halted production of liquified natural gas following attacks on its facilities last week.
While the UK imports oil and gas from a variety of places, not just the Middle East, continued disruption in the Strait will likely cause a spike in demand for alternatives, causing a rise in energy costs – as was the case four years ago.
Analysts at Cornwall Insight said household energy bills could rise by 10% from July because of sharp increases in wholesale gas prices.
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This could see Ofgem’s price cap for July to September surge by 10% or £160 compared to April’s cap, but remains dependent on how long gas prices stay elevated.
Balwinder Dhoot, director of growth and sustainability for the Food and Drink Federation (FDF) said it was “too soon to say what the full impact of the conflict in the Middle East will be on UK food and drink”.
He told the PA News Agency: “However, with food manufacturers already under strain from years of rising business costs, and food inflation running higher than historical averages, seeing the spike in gas prices in a concern.”
He added that food and drink is an “energy intensive sector” and called for government support to offset the impact of the price spikes.
