Of oil and fuel prices

The price of oil is rapidly trading in only one direction. Petrol prices, at the pump, could reach £2 per litre this Spring. The deciding factor is how long this conflict goes on for, now called ‘duration risk’. Trump has made a bad bet here, thinking the regime in Tehran was flimsy and would fall quickly. The more likely result is a negotiated settlement but that timeline is on Trump.

The current situation in the Middle East has triggered a significant "war premium" on global energy markets, driving Brent crude toward $80, with intraday spikes hitting $82. This "war premium" is fuelled by Maersk and other giants rerouting vessels away from the Strait of Hormuz and Suez Canal. If these transit points remain blocked, experts warn Brent could breach $100, potentially pushing UK petrol prices from the 138p-142p per litre last month towards 155p and diesel above 162p per litre. In a worst-case scenario involving sustained regional war, prices could mirror the 2022 crisis, exceeding $120 per barrel. The "silver lining" is that global oil inventories are currently higher than they were in 2022, which may provide a temporary cushion, but market volatility will remain high.

Brent spiking on market opening and set to continue its climb. With the Strait of Hormuz effectively closed limiting short term supply expect prices to jump at the pump, threatening The Bank of England Governers baked on guarantee inflation will be at 2% in the coming months . I’d be keeping my eye on my tank levels and filling up at regular opportunities

For those with mortgage renewals in the next 6 months, this is the kind of event that could push mortgage rates higher in the short term, so it is imperative that you look to secure a remortgage or product transfer, or reserve a mortgage deal immediately. Rates can always be changed later if the conflict quickly ceases and rates fall back, but with Swap rates likely to react early this week, and mortgage rates will follow suit, your Mortgage broker will be able to help secure the cheaper deals, as long as you are document-ready.

Fear is currently fueling fear faster than the facts can catch up. We know where that leads. Long queues, petrol stations running dry, neighbours turning on neighbours. The facts are stark, and prices will more than likely increase. Take what you need, leave some for the next person.