Fuel pump prices across the UK and Europe are beginning to rise following new Israeli strikes on Iran, with analysts warning of record costs within weeks. The increases come as the US has confirmed the deaths of its first soldiers in the escalating conflict, further heightening geopolitical tensions.
Brent crude, the international benchmark for oil prices, experienced a jump of 10% to $82 a barrel on Monday, before settling back to $78 on Wednesday. The AA, a British motoring association, has predicted that record petrol prices could be seen in the next two weeks. Although prices have risen slightly already, the potential for further increases is causing concern among consumers and governments.
Irish Taoiseach Micheál Martin stated there was “no excuse” for fuel price rises, given that Ireland’s oil supply originates from the North Sea. He added a warning against “price gouging,” suggesting potential market manipulation. Spain’s government has indicated it is actively monitoring petrol prices to prevent speculative increases.
The impact is not limited to petrol. In Northern Ireland, where approximately two-thirds of homes rely on heating oil, some suppliers have increased prices by more than a third. The average cost of 500 litres rose from £307 on February 26th to as high as £425 from some providers, according to reports.
Airline ticket prices have also surged, particularly on routes between Europe and Asia. The closure of major Middle Eastern air hubs has led to widespread flight cancellations, leaving passengers scrambling for alternative options and facing significantly higher fares. Commodities analyst Michelle Wiese Bockmann reported fares ranging from €2,400 to €3,600 for flights to London, accusing airlines of exploiting the situation. She called for government intervention, stating the situation was “worse than the pandemic” and “disgraceful.” Private jet operators are also capitalizing on the disruption, with reported costs of £20,000 per seat for flights from Oman to Milan and €215,000 for a 13-seater charter from Oman to Paris – almost double standard rates.
While supermarket bills have not yet reflected the conflict, experts anticipate a knock-on effect from potential disruption to shipping through the Strait of Hormuz. This vital waterway handles an estimated fifth of global oil and gas supplies and a third of global fertilizer shipments. Grain prices are already rising, and the transport of goods like Asian shrimp, dried fruit, and nuts to Europe is expected to become more expensive and time-consuming. Disruptions to Iranian exports of pistachios, walnuts, almonds, saffron, and dates could also contribute to price increases.
However, a potential mitigating factor could be a rerouting of Brazilian beef and poultry exports, typically destined for the Middle East, to European markets, potentially leading to lower prices for European consumers, according to the Association of Independent Meat Suppliers.
The conflict is also impacting maritime insurance. Leading insurers have cancelled war risk cover for vessels operating in the Gulf, effective Thursday, though many are expected to offer reinstatement at significantly increased premiums. Marcus Baker, global head of marine at Marsh, estimates insurance rates could rise by 50% to 100%, increasing costs from 0.25% to 0.5% or even 1% of the insured asset’s value. Mutual P&I cover remains unaffected.
The UK, France, and the US are all directly involved in the escalating situation. The UK and France have dispatched warships and air defence assets to Cyprus following a drone attack, according to reports. The extent of Britain’s involvement is under scrutiny, with questions raised about its role in the US-Israeli actions against Iran.
