Fuel companies are under scrutiny as the government’s cost of living advisor accused some of engaging in unfair practices. Chancellor Rachel Reeves and Energy Secretary Ed Miliband are scheduled to meet with industry leaders to emphasize their zero-tolerance stance on profiteering from oil price hikes. Richard Walker, the head of Iceland, and the government’s cost of living advocate, expressed strong disapproval, stating that companies exploiting the situation will not be tolerated.
The average price of unleaded fuel nationwide has surged to 140.15p per liter, marking an increase of over 7p since the conflict began. Diesel prices have risen even more rapidly, soaring by nearly 16p to 158.23p per liter. This increase comes as oil prices hover around $100 per barrel, the first time since August 2022, due to heightened attacks on infrastructure and shipping in the Gulf by Iran.
Ed Miliband hinted at potential government support or an extension of the fuel duty freeze if the conflict persists. He also criticized those urging the Labour party to relax its net zero targets, emphasizing the need for sustainable, domestically sourced energy to avoid similar crises in the future.
The ongoing conflict has triggered a spike in mortgage rates amid fears of escalating energy costs leading to higher inflation. Industry experts revealed that the average cost of a new five-year fixed-rate mortgage has surged to a near 12-month high of 5.19%. Additionally, the availability of fixed-rate mortgage deals has plummeted by 530 since the conflict’s onset.
The Bank of England is poised to maintain its base rate next week, as opposed to the anticipated rate cut before the crisis. Concerns loom over the possibility of the UK economy slowing down further or entering a recession this year, with data from the Office for National Statistics indicating zero growth in January before any war-related impacts.
Despite the International Energy Agency’s decision to release 400 million barrels from reserves, oil prices are set to rise by 10% this week. The IEA warned of significant disruptions in the global oil market due to the ongoing conflict. Iran’s intensified attacks in the Strait of Hormuz have heightened concerns, with Tehran threatening oil prices reaching $200 per barrel.
Meanwhile, Russia is reported to have profited over £1 billion from surging oil prices to fund its activities in Ukraine. Moscow is estimated to be earning up to $150 million (£113 million) daily from taxes on oil exports, while Gulf state oil producers have faced substantial revenue losses since the conflict began. The blockade in the Strait of Hormuz has fueled demand, allowing Russia to benefit significantly from the situation.
