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Price of oil at highest level since November: Experts warn UK could see petrol prices and inflation rise

ended 13. January 2026

THE price of oil has reached its highest level since November as experts warned Donald Trump's actions on the world stage will hit the US Dollar and the UK will see petrol prices and inflation rise.

In the wake of Trump placing a 25 per cent tariff on all nations “doing business" with Iran, Brent Oil futures are trading at more than $64.50 today.

That's a one per cent rise in 24 hours – the last time it was that high was two months ago.

In mid-December, oil was as low as $59.

Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said petrol prices and inflation could go up in the UK.

He added: "The Bank of England faces a dilemma as the UK economy desperately needs stimulus, but rising oil and gas prices threaten to import inflation into the country. Consumers and businesses will bear the brunt of higher energy and transport costs. 

"As a net importer of refined petroleum, the UK typically sees these costs passed directly to consumers, further dampening GDP growth. Economists estimate that a sustained 10% increase in oil prices adds approximately 0.2 to 0.3 percentage points to CPI inflation. 

“Unless the current spike proves temporary, elevated fuel costs could trigger a renewed wage-price spiral, trapping the Bank of England in the classic trade-off between controlling inflation and supporting growth. Prior to this oil price surge, markets anticipated interest rates falling to 3.25% by late 2026. However, the current spike has cast significant doubt on those cuts and could even force the Bank to raise rates if oil prices remain above $65 per barrel.”

Pete Mugleston, Mortgage Advisor & Managing Director at Derby-based onlinemortgageadvisor.co.uk, said Donald Trump's actions on the world stage will hit the Dollar.

He added: "Trump is being bold on the global stage, but that boldness could come with a cost. If countries start to worry they could become targets of US foreign policy, they may grow more cautious about holding large dollar reserves.

"That points to a continued shift toward gold in 2026 and potentially a softer dollar over time."

Scott Gallacher, Director at Leicester-based Rowley Turton, said the oil price is actually significantly lower than a year ago.

He added: "Despite today’s move, oil prices remain almost 20% lower than a year ago, meaning they are currently acting as a drag on inflation rather than a threat.

“On its own, this is unlikely to have any meaningful impact on UK inflation or household costs. As a result, it does not change the outlook for Bank of England interest rate policy."
 

2 responses from the Newspage community

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Editor
Scott Gallacher
Director at Rowley Turton
It’s unfair to call a 1% rise a spike, as that sits comfortably within the normal daily movement of Brent crude oil. Despite today’s move, oil prices remain almost 20% lower than a year ago, meaning they are currently acting as a drag on inflation rather than a threat.

On its own, this is unlikely to have any meaningful impact on UK inflation or household costs. As a result, it does not change the outlook for Bank of England interest rate policy.
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Editor
Tony Redondo
Founder at Cosmos Currency Exchange
The Bank of England faces a dilemma as the UK economy desperately needs stimulus, but rising oil and gas prices threaten to import inflation into the country. Consumers and businesses will bear the brunt of higher energy and transport costs. As a net importer of refined petroleum, the UK typically sees these costs passed directly to consumers, further dampening GDP growth. Economists estimate that a sustained 10% increase in oil prices adds approximately 0.2 to 0.3 percentage points to CPI inflation. Unless the current spike proves temporary, elevated fuel costs could trigger a renewed wage-price spiral, trapping the Bank of England in the classic trade-off between controlling inflation and supporting growth. Prior to this oil price surge, markets anticipated interest rates falling to 3.25% by late 2026. However, the current spike has cast significant doubt on those cuts and could even force the Bank to raise rates if oil prices remain above $65 per barrel.