The price of Brent crude oil has soared to $119 (£90) per barrel, reaching levels not seen since the onset of the recent conflict between the US and Israel against Iran. This sharp increase follows Iran’s strategic blockade of the Strait of Hormuz, a crucial maritime route for global oil transportation, in response to air strikes initiated by the US and Israel on 28 February. As a result, wholesale oil prices have surged, prompting a significant rise in fuel costs across various markets.
Impact on Global Fuel Prices
The ripple effects of rising oil prices are being felt worldwide, with car fuel prices hitting their highest levels in years. In the United States, petrol prices at the pump have surpassed $4 per gallon for the first time in almost four years, as reported by the American Automobile Association (AAA). Meanwhile, in the UK, the average price of petrol has reached 152.8p per litre, marking a two-year high and an increase of approximately 20p since the beginning of the conflict. Diesel prices have also seen a notable rise, climbing to 182.77p, the highest since December 2022 and 40p above pre-war levels.
The Royal Automobile Club (RAC) has indicated that while petrol prices may stabilise if oil costs do not escalate further, diesel prices are likely to continue their upward trajectory. Furthermore, average energy bills in the UK are projected to increase by £288 per year for a typical dual-fuel household starting in July.
Jet Fuel Supply Concerns
The aviation sector is not exempt from the fallout of rising oil prices, with jet fuel experiencing similar inflation. According to data from Vortexa, the last shipment of jet fuel en route from the Middle East to the UK is expected to arrive later this week, a significant departure from the norm; in 2025, there were typically eight cargoes en route at any given time. Mick Strautmann, a market analyst at Vortexa, noted the unusual absence of jet fuel shipments, highlighting that while the UK still receives jet fuel from various sources including India and the USA, India is currently prioritising exports to Southeast Asia due to enhanced pricing and shorter shipping distances.
George Shaw, a senior insight analyst at Kpler, confirmed that the upcoming shipment was loaded at a Red Sea refinery, bypassing the Strait of Hormuz. This indicates a potential shift in supply dynamics. Air France-KLM has announced plans to raise long-haul airfares to mitigate increased fuel expenditures, while Scandinavian Airlines (SAS) has opted to reduce its flight schedule by 1,000 in April due to the same pressures. British Airways’ parent company, International Airlines Group (IAG), has indicated that it currently has no plans to raise prices, having secured fuel costs through hedging contracts established before the conflict. EasyJet has warned, however, that ticket prices may rise later this summer as its hedging agreements come to an end.
Government and Industry Responses
Governments worldwide are responding to the escalating fuel prices in varying ways. Australia has implemented a temporary measure making bus travel free to alleviate the financial burden on commuters, while Egypt has mandated early closing times for shops, restaurants, and cafes to reduce energy consumption. These measures reflect a growing concern over the economic impact of soaring fuel prices on consumers and businesses alike.
A spokesperson for Airlines UK reported that UK airlines are currently not experiencing disruptions in jet fuel supply. They are actively engaging with fuel suppliers and the government to closely monitor the situation, which remains fluid as geopolitical tensions evolve.
Why it Matters
The surge in oil prices is not merely an economic statistic; it signals the potential for broader economic instability and inflationary pressures globally. As countries grapple with the implications of rising fuel costs, the impact on consumer spending, transportation costs, and overall economic growth becomes increasingly pronounced. The interplay of geopolitical tensions and energy supply chains underscores the fragility of global markets, prompting a reevaluation of energy policies and international relations. The current situation serves as a stark reminder of how interconnected our economies are and the far-reaching consequences that arise from conflicts in critical regions.
