Key Highlights
- Petrol and diesel prices start to increase due to production slowdowns in the region.
- UK gas prices almost double in less than a week after Iran threatened to block the Strait of Hormuz.
- Inflation’s downward trend could be reversed, potentially leading to higher costs for consumers.
- Fertiliser prices up by a fifth due to shipping and production disruptions.
The Ripple Effect: How Iran Conflict Could Impact Your Wallet
- Petrol and diesel prices start to increase due to production slowdowns in the region.
- UK gas prices almost double in less than a week after Iran threatened to block the Strait of Hormuz.
- Inflation’s downward trend could be reversed, potentially leading to higher costs for consumers.
- Fertiliser prices up by a fifth due to shipping and production disruptions.
It’s been four days since the eruption of conflict in Iran, and already, the reverberations are felt far beyond the Middle East. As a seasoned industry veteran, I can assure you that this isn’t just another geopolitical skirmish—it’s a potential game-changer for your daily life.
Petrol Prices on the Rise
The crisis has caused an immediate rise in fuel prices as production and transport of oil and gas across the region have slowed or stopped entirely. In the UK, petrol cost an average of 132.14 pence per litre at the pump while diesel cost an average of 142.15 pence per litre, according to weekly official figures. The RAC, which tracks daily prices, said between Saturday and Thursday, average prices rose by 3 pence per litre for petrol, and 5 pence per litre for diesel.
UK Gas Prices Skyrocket
The UK gas price has almost doubled in less than a week. The benchmark UK gas price rose above 165 pence a therm on Tuesday, which it last traded at a year after the start of the Ukraine war. It closed at 138 pence a therm, still over a fifth higher than Monday’s price, before falling to 127 pence on Wednesday.
Inflation and Your Wallet
There are concerns that the Iran conflict could reverse the overall downward trend of inflation. The rate at which prices rise has been falling in recent months, but as central banks across the world try to curb rising prices, we might see fewer interest rate cuts or even rises. Analysts are now speculating there may be fewer cuts than expected this year in the UK, and some are predicting a rise.
Fertiliser Prices on the Rise
The Strait of Hormuz is a key route for fertilisers and natural gas used to produce them. The halting of traffic there has prompted fears of shortages and increased prices. QatarEnergy, one of the world’s biggest exporters of gas and producer of urea for use in fertiliser, has stopped production following “military attacks” on its facilities.
The US futures price of urea was $567 a tonne on Wednesday, up 21% in a week.
While it’s too early to tell if the rise in fertiliser prices will translate to higher prices on supermarket shelves and that any change wouldn’t be instant, the potential impact is significant. The vast majority of the world’s traded goods are transported by sea, and rising fuel costs mean carriers are likely to start raising rates globally.
So, you might think this is new, but it’s not. The Middle East has always been a key player in global energy supplies, and any disruption here can cause ripples across the world economy.
As an industry veteran, I advise keeping your wallets ready for what could be a bumpy ride ahead.
And remember, while we’re all hoping for peace, history shows that these kinds of conflicts often take time to resolve. So brace yourselves for potential higher costs in days and weeks to come.
