Hormuz Tensions Drive Oil to $119

Brent crude oil climbed to $119 per barrel, moving close to its highest level since the start of the US-Israel conflict with Iran, as energy markets reacted to a major shipping disruption.

Officials said Iran has effectively blocked the Strait of Hormuz, a key maritime route for global oil shipments. The move followed US-Israel airstrikes that began on February 28, and the resulting interruption has pushed up wholesale oil prices and filtered through to higher costs for consumers.

In the United States, petrol prices at the pump rose above $4 per gallon for the first time in nearly four years, reflecting the rapid pass-through from crude and refined product markets. The rise in retail fuel costs adds pressure on household budgets and transport-intensive businesses, with fuel typically among the most visible inflation-sensitive items for consumers.

In the United Kingdom, petrol prices increased to 152.8 pence per liter, described as a two-year high, while diesel reached 182.77 pence, the highest since December 2022. Separately, average UK energy bills are projected to rise by £288 per year for typical dual-fuel households starting in July, adding to the broader cost impact linked to higher energy inputs.

The aviation sector is also being hit as jet fuel prices rise. The final shipment of jet fuel from the Middle East to the UK that passed through the Strait of Hormuz is expected to arrive this week, underscoring how quickly the disruption is affecting supply chains for refined products as well as crude.

While the UK also sources jet fuel from India, the USA, and the Netherlands, those volumes are currently not enough to replace the reduced flow from the Middle East. That shortfall is already shaping airline decisions: Air France-KLM said it plans to raise fares, and SAS said it intends to cut flights, as both seek to manage higher fuel costs.

For markets and policymakers, the immediate focus is the extent and duration of the Strait of Hormuz disruption and how it translates into sustained price pressure across fuels and household energy. A key uncertainty remains how long the effective blockage persists and how quickly alternative supply routes and sources can compensate for reduced Middle East flows.