As Donald Trump’s war on Iran spreads further throughout the Middle East, the cost of oil has soared as traders show concerns over inflation. The price of Brent Crude, treated as an industry benchmark for oil, soared past $100 a barrel for the first time since late July after the Houthis - an Iranian proxy group - struck energy sites in Saudi Arabia, threatening to drag the Kingdom deeper into conflict. The US military said its destroyed five Iranian tankers carrying crude following attempts to strike a US Navy warship with ballistic missiles, while Iran claimed to have attacked two American vessels and eight oil tankers in the Gulf.
As well as this, Iranian-backed Houthi forces in Yemen launched strikes on several Saudi cities targeting energy infrastructure, including the 400,000-barrel-a-day Jazan refinery. The Independent looks at the economic data that should be worrying Trump and other world leaders as he struggles to end the war he started in late February. While Trump claimed on Tuesday in a Truth Social post that “oil prices will drop precipitously” should the US win the war with Iran, the above chart shows the seismic impact of the conflict on the global economy.
Before the conflict, the price of a barrel held steady at around $61. It jumped to a high of $138 in April after Iran shut the Strait of Hormuz, through which a fifth of the world’s oil passed in peacetime, before declining in response to a prolonged ceasefire. The US and Iran announced an interim peace agreement in June that later collapsed.
The rising costs of Brent Crude have fanned inflation worries and curbed risk appetite while showing the demand for the commodity is on the up. Meanwhile, the price of natural gas in the UK peaked at 197 pence per therm, the highest level since December 2022 as the conflict heightens concerns over further supply disruptions. Sustained disruptions have forced Qatar to suspend shipments and extend a force majeure on cargoes to Europe and Asia through autumn.
This reduction in LNG deliveries has slowed European storage injections, with gas inventories remaining below the seasonal average, leaving the market increasingly vulnerable as the winter heating season approaches. Ofgem, the UK’s energy regulator, warned that the price cap will rise by £60 per year – or £5 per month – to £1,723 for the average household using both electricity and gas if this level was sustained for a year. Reacting to the energy price cap rise, Miatta Fahnbulleh said: “Families will be understandably concerned about the cost of energy bills this winter, which is being driven up by the Iran war.
The World Cup and record hot weather in June are believed to have helped the economy, according to the latest quarterly data, which didn’t take as much of a hit as expected after impressive growth at the start of the year. But chancellor John Healey warned on Monday that the Budget in the autumn could be tough as the war squeezes the British economy. Economists have predicted that the fiscal buffer Rachel Reeves built up in her last budget as chancellor, through a combination of tax rises and departmental spending cuts, will be squeezed by inflationary pressures.
Extract — continue reading at the source.
