Prime Minister Sir Keir Starmer is chairing an urgent COBRA meeting today, as the UK government confronts severe economic repercussions stemming from escalating disruptions in the Strait of Hormuz.
Global oil prices are being warned to potentially reach $150 a barrel, a threshold historically linked with substantial economic contraction and recessionary pressures.
The Strait of Hormuz, a crucial maritime chokepoint between Oman and Iran, is vital for global energy security. Annually, it facilitates the transit of approximately 20% of the world’s liquefied natural gas (LNG) trade and about 25% of seaborne oil, representing roughly one-fifth of total global oil consumption.
Current hostilities in the area are severely hampered shipping, with reports indicating a drastic reduction in vessel traffic as companies reroute or suspend operations. The International Energy Agency’s March 2026 report has characterised this as the largest supply disruption in the history of the global oil market.
This escalating geopolitical tension has triggered sharp increases in global energy prices. Brent crude, the international benchmark, has already surpassed $100 per barrel and reached a peak of $126 per barrel since the conflict began.
On March 31, 2026, Brent crude stood at $106.66 per barrel, reflecting a 37.20% rise over the past month and a 43.19% increase year-on-year.
Bruce Kasman, global head of economics at JP Morgan, highlighted the gravity of the situation, stating: “A scenario in which the strait remains closed for an additional month would be consistent with oil prices rising towards $150 a barrel and constraints on industrial consumers of energy supply.” A sustained spike to this level would effectively act as a significant tax on the global economy.
The ripple effects are being keenly felt across the UK economy, particularly within the agricultural sector. Rising energy costs directly translate into steep increases in fertiliser prices, a critical input for farmers, especially during the vital planting season. Natural gas is the primary feedstock for nitrogen-based fertilisers like urea, accounting for a significant portion, typically 60-80%, of production costs.
Urea prices in the UK have surged by 36% since January, with farmgate prices rising from £491 per tonne to £618 per tonne.
John Fuller, chairman of fertiliser supplier Nitrasol, told Sky News: “In the last six weeks it’s gone up probably by about 25% as we’ve had to fight off other buyers.”
He added: “We had a shipment last Sunday, and those farmers that bought early are securing the old price, but for those who left it to the last minute, I’m afraid that we’re having to buy from the new cargoes, those are more expensive.”
Fuller drew a stark comparison to past economic shocks, stating: “It’s a really serious situation. In some respects, it’s worse than it was four years ago in the Ukrainian situation, and we all know what happened six months later. There was 10% inflation, and that knocked the government right back. And I just hope that the government grips this.”
This echoes the 2022 energy crisis, where the Russia-Ukraine conflict contributed to UK retail food inflation peaking at 19.1% in March 2023, the highest rate in over 40 years. Current forecasts from the Institute of Grocery Distribution (IGD) suggest that persistent energy market disruption could push UK food inflation to over 8% by June 2026, potentially adding more than £150 annually to average household grocery bills.
Consumers are already observing the impact at the pumps. Diesel prices have surged to an average of 181.2p per litre, marking a 27% increase since the conflict began on February 28, and representing the highest level since December 2022. Petrol prices have also risen by 14% to 152.0p per litre. While these figures remain below the record highs seen in July 2022 (191.5p for petrol and 199.09p for diesel), they impose a substantial financial burden on both households and businesses.
In response to the escalating crisis, the Prime Minister’s COBRA meeting – a Cabinet Office Briefing Room committee convened for national emergencies to coordinate a unified governmental approach – will convene senior ministers and industry leaders.
Speaking to business leaders yesterday, Sir Keir emphasised the need for collective action, stating: “The Government can’t do it on its own. You can’t do it on your own. We’re going to have to work together on this.”
He further pledged that the Government would act to “make sure that everything that we need to have in place, everything is monitored and audited properly.”
The Bank of England has responded to the crisis by holding interest rates at 3.75%, anticipating a prolonged energy shock.
