Oil prices latest: Energy boss fears ‘white knuckle ride’ ahead as Trump’s Iran strikes send fuel costs soaring

The price of oil has hurtled well past the $100 barrier and sits above $106 on Monday morning – a surge in price of well over a third (37 per cent) in the space of a week, something which promises a big impact on people’s finances.

What we refer to as oil is typically the contract price of Brent crude – a global benchmark for pricing of the commodity regardless of its origin. Brent crude comes from the North Sea. Its price rises and falls in line with supply and demand for oil as a whole, not just of its own type.

Rising oil costs will naturally push energy bills higher, but it’s far from just about turning the heating on – higher fuel costs impact manufacturing, transport, food and everything else.

Karl Matchett, business and money editor, reports:

The longer conflict with Iran goes on “the more likely the impact on our economy”, Sir Keir Starmer has warned while meeting members of the public.

Brits who drive electric vehicles could be insulated from spikes in the international energy markets, an analyst from non-profit organisation Energy and Climate Intelligence Unit has said.

Colin Walker, Head of Transport at the Energy and Climate Intelligence Unit, said:”Such an increase in the price of oil could see a litre of petrol jumping to around £1.90 – a price last seen in 2022 after Russian’s invasion of Ukraine – adding over £500 to the average fuel bill of a British petrol car driver.

“But with 1.8m EVs now on the UK’s roads, an increasing number of British drivers are insulated from these spikes in international energy markets. Accelerating the transition to EVs – increasingly powered by electrons generated by British wind and solar farms – is one of the most effective things the UK can do to end its dependency on foreign oil and protect its drivers from volatile markets over which we have no control”.

Political reporter Athena Stavrou reports:

The chair of Utilita has warned that there is a “white knuckle ride” ahead as energy bosses “just don’t know” how long the war could impact oil prices.

Derek Lickorish said he “cannot see how” the government will be able to keep its pledge to reduce energy bills, and said there is “big anxiety” about how high gas prices could go.

Speaking about the 2022 oil price increase, Mr Lockorish told Times Radio: “It’s clearly not at this point in time because at the moment, don’t forget the war doesn’t show any signs of coming to an end, there is big anxiety. How high will gas prices go? We just don’t know.”

He added: “It’s going to be a white knuckle ride and we need to be looking at what we can do to try and improve this for customers going forward because if you think back to 2022 we thought that was a one in 100 year event and now we’ve had the second one in four years.”

Housing minister Steve Reed has attracted criticism today for refusing to commit to Labour’s promise to cut £300 from household energy bills by 2030.

The pledge was made by the party before the 2024 general election, with Ed Miliband giving the new decade deadline after being appointed energy secretary.

The outbreak of conflict between the US and Iran has cast doubt on this, as new pressure on global gas and oil trade causes wholesale energy costs to spike by around 50 per cent.

In better news for UK households, Ofgem’s energy price cap for April to June was set in February, meaning bills are effectively protected until July. The energy regulator announced a seven per cent, or £117, reduction to the figure, broadly in line with Labour’s pledge to cut energy bills by £150 from the start of the new financial year through scrapping an energy efficiency scheme.

Ofgem will announce its cap for July to September by 27 May. This could be a steep increase of as much as 10 per cent, or £160, increase if there is no de-escalation in the Middle East, experts have warned.

The rise threatens to effectively wipe out the savings Labour was looking to pass to households over the year, however energy bills in this scenario are still lower than they would have been had the government not made the change.

Cabinet Minister Steve Reed said the economy was strong enough to weather the economic storm caused by the Middle East war.

The Communities Secretary told ITV’s Good Morning Britain: “Of course, the UK can’t control things that happen, crises that happen across the planet, that have an impact on us here at home.

“What we can control are our own circumstances.”

He said in last week’s spring statement Chancellor Rachel Reeves was able to “point to those benefits of a more stable economy thanks to her stewardship of the economy, that puts us in a better position to weather whatever storms might come our way”.

He added: “Now, when it comes to the cost of oil, and we’ve seen what’s happened overnight, we’re still only just over a week into this conflict, we don’t know how long it will go on, we don’t know what the long-term impact will be on energy prices.

“But, as I say, the fact that we have a more stable economy means we’re in a better position to weather those storms, and we will, of course, keep a very close eye as we monitor the situation.”