Energy Crisis May Echo 70’s Oil Shock, Ex-BoE Deputy Says

The UK could be on the cusp of an energy crisis comparable to the chaos seen in the 1970s, according to a former deputy governor of the Bank of England.

Iran continues to restrict the number of oil tankers which can travel through the major shipping lane, the Strait of Hormuz, in retaliation against the US-Israel strikes from last month.

As the conflict continues, the global economy is facing a period of uncertainty – and energy bills are expected to rise, pushing up the cost of living.

The government is considering supporting some energy bills for targeted households once the current energy price cap lifts in July.

As fears grow over what lies ahead, former deputy governor of the Bank of England, Sir Howard Davies, suggested it was “probably right” to compare the current era to the crises we saw in the 1970s.

World oil prices soared at the time, triggered by the 1973 Arab-Israeli war. The price of an oil barrel then quadrupled in a matter of months.

Arab oil-producing countries only ended their oil embargo against western nations after intense negotiations, though another crisis emerged in 1979 in the wake of the Iranian Revolution.

Davies compared that worldwide energy crisis to the current situation.

“In this case it could well be that supplies from the Middle East are constrained for some time and therefore we may have to live with a higher oil price – perhaps not $150, but certainly higher than $60 it was when we started,” Davies told BBC Radio 4′s Today.

“That requires a plan to increase alternatives and also to reduce consumption because it also looks like we may have a long term reduction in supply.”

Brent crude oil hit $116 per barrel on Monday morning.

Keir Starmer tried to prevent any panic buying from the public when speaking to the media on Monday.

The PM said the advice from the energy sector chiefs is “normal use, no need to do anything other than what’s normal”.

He added: “Obviously, we are bearing down on energy costs. The single most important thing we could do is de-escalate to get the Strait of Hormuz open.

“That’s why I’m putting so much effort into that aspect.”

A Downing Street spokesperson also said: “It’s obviously a serious conflict as the prime minister and the chancellor have said and they’ve been very clear that the impact of disruption to shipping and to the Strait of Hormuz is having an impact here in the UK, and households up and down the UK.”

He said the government’s focus is on working with international partners to de-escalate the situation and reopen the Strait.