Oil nears highest price since start of Iran war

Brent crude oil, the global benchmark, reached $119 per barrel, marking its highest point since the US-Israel conflict began. This spike follows Iran’s decision to disrupt the Strait of Hormuz, a critical maritime route for oil shipments, after the US-Israel air strikes commenced on 28 February. The blockade has triggered a sharp increase in wholesale oil prices, with car fuel costs also climbing to their highest levels in recent years.

As oil prices soar, nations are adopting varied strategies to manage the financial strain. Australia has introduced free bus travel, while Egypt is urging businesses to close earlier to reduce energy consumption. In the US, petrol prices at the pump have crossed $4 a gallon for the first time in nearly four years, per AAA data. The UK, meanwhile, recorded petrol at 152.8p a litre, its highest in two years, and diesel prices climbed to 182.77p, the highest since December 2022.

“Petrol prices could stabilise if oil costs don’t escalate further, though diesel appears set to continue rising,” noted Simon Williams, RAC’s head of policy.

With energy bills anticipated to rise by £288 annually for typical dual-fuel households from July, the strain on consumers is intensifying. The aviation sector has also felt the impact, as jet fuel costs surge. Vortexa’s Mick Strautmann highlighted that the final Middle East-bound jet fuel shipment en route to the UK is scheduled to arrive this week, a rare occurrence given the usual eight cargo vessels in transit by 2025.

A UK government representative confirmed that jet fuel imports remain active, citing sources like India, the US, and the Netherlands. However, Strautmann explained that India is currently prioritising Southeast Asian exports due to higher prices and closer markets. Despite some contributions from West Africa and the US, overall volumes have not compensated for the loss of Middle East shipments.

“The last vessel to load jet fuel from the Red Sea will discharge into Europe this week,” stated George Shaw, Kpler’s senior insight analyst. “It bypassed the Strait of Hormuz, which has been effectively closed by Iran.”

European airlines are adjusting to the rising fuel costs. Air France-KLM has announced plans to raise long-haul fares, while Scandinavian carrier SAS has already increased ticket prices and will cut 1,000 flights in April. British Airways’ parent company, IAG, maintains no immediate price hikes due to pre-conflict fuel contracts. EasyJet, however, hinted at potential fare increases by summer when its hedging agreements expire.