The US and Israeli military strikes on Iran have sent global oil and gas markets spiraling, according to research from eight sources. Benchmark US crude prices hover near $95 per barrel, a significant rise from prewar levels in the low- to mid-$60/bbl range, and oil prices have at points soared to close to $120 (£90) a barrel due to the conflict. Shipments of oil and gas through the Strait of Hormuz are at a standstill due to Iranian threats to tankers, and about a fifth of the world's oil passes through the strait—around 20 million barrels each day, according to estimates from the US Energy Information Administration. Global oil markets are well integrated, so a disruption in one part of the world will lead to a global spike in crude oil prices, research indicates. Oil and natural gas prices jumped on Monday 2 March after the strikes, and the escalation of conflict has disrupted supplies, sending wholesale prices soaring.
In the UK, the conflict has already impacted personal finances, including petrol prices and mortgage rates, research from two sources shows. Average petrol prices hit 144.51p a litre, up by 11.7p since the start of the conflict, while diesel increased by 23.9p to 166.24p, according to the RAC motoring organisation. Analysts note that every $10 increase in oil pushes up pump prices by roughly 7p a litre. The average two-year fixed mortgage rate has jumped from 4.83% at the start of March to 5.35% now, its highest since last March, according to the financial information service Moneyfacts. A typical new mortgage taken out on Wednesday was £788 a year more expensive than before the Iran war began, and about 1,000 residential mortgage products have been withdrawn from the market.
Housebuilder Barratt Redrow has responded to the turmoil by cutting its land buying plans for the year amid a 'less certain backdrop' due to geopolitical events, the company said. Barratt Redrow reduced its land buying guidance again, cutting it by a further 3,000 plots, and now anticipates total land approvals for the financial year of between 7,000 and 9,000 plots, below its previous guidance range of between 10,000 and 12,000 plots. In the 13-week period from 29 December 2025 to 29 March 2026, the company approved 2,465 plots for purchase across 14 sites, down from 7,574 plots across 37 sites the previous year. Barratt Redrow has been taking a more 'disciplined' approach to land purchases for some time, and according to an official statement, 'Now, with a less certain backdrop, given recent geopolitical events and their likely impact on mortgage rates and build cost inflation, we are being even more selective.'
Now, with a less certain backdrop, given recent geopolitical events and their likely impact on mortgage rates and build cost inflation, we are being even more selective.
The construction industry is under mounting pressure from rising costs. Barratt Redrow has warned that higher energy costs will increase building material costs, and higher oil prices since the start of the war at the end of February have sent fuel and energy costs surging around the world, affecting the cost of raw goods and materials. A spike in energy prices could see contractors and sub-contractors paying more for transport and materials, placing upward pressure on tender prices, said Karl Horton, data services director at the Building Cost Information Service. Manufacturing suppliers are looking at energy surcharges or price increases to counteract energy rises, according to Gavin Slark, the new chief executive of Travis Perkins. The volume of sales of building materials dropped by 7.2% in January in the UK, compared with the same month last year, according to the Builders Merchants Federation, and about 75% of building materials are made in the UK, but many require energy for materials like steel, oils, resins and glass.
Barratt Redrow is adjusting its operations in response. The company is on track to deliver home completions of between 17,200 and 17,800 in the full year to June, but completed 3,274 homes in the period, down from 3,717 over the same period a year ago. Build cost inflation for the year is expected to average 2 percent across the year, creeping to 3 percent in the second half, and Barratt Redrow expects build cost inflation to rise further in the 2027 fiscal year amid 'heightened macroeconomic uncertainty.' The company will have 'better visibility' on longer-term build cost inflation once it publishes its next trading update in July.
Despite challenges, Barratt Redrow said it faced 'limited impact' from the war and was still 'well placed' to secure 'the most competitive pricing' for its building materials. The company said it would 'switch from traditional to timber frame construction', through Oregon, its timber frame business, should traditional construction input costs become too high.
The shares have fallen by 38 per cent over the last year, very much missing out on the broader revival whereby the wider FTSE 100 rose by 29 per cent over that period, and by 66 per cent over the last five years.
Broader housing market implications are emerging. The Iran war could push up construction and energy costs in the UK, reducing the likelihood of a rapid rise in housebuilding, experts say. Barratt Developments expects completed homes to drop by up to 7% to between 13,000 and 13,500 this year, down from 14,004 in the year to 30 June. The OBR forecasts the low point in housebuilding will be next financial year (2026-27), after which it expects housebuilding to rise very sharply, according to Noble Francis, economics director at the Construction Products Association. However, the OBR forecasts only 1.3 million net additional dwellings in the UK over the five-year parliament, missing the government's 1.5 million target for England by 400,000 homes.
International ripple effects are evident, with Spain's construction sector also facing strain. Donald Trump's war in the Middle East could push construction costs even higher in Spain, adding fresh pressure to housing supply and prices, industry leaders warn. The price of many building materials in Spain has increased by around 45% since 2021, driven by supply disruptions after the pandemic and the war in Ukraine, according to the CNC. The cost of new construction in Spain has risen by more than 32% between 2020 and 2025, and Spain's housing market faces a deficit estimated at around 700,000 homes.
Corporate developments show Barratt Redrow navigating a difficult landscape. Barratt has agreed to buy Redrow in a £2.5bn deal, which both sets of shareholders approved in mid-May. Barratt expects adjusted profits before tax to be slightly ahead of previous expectations, amid tight cost control and easing building materials inflation. The company is cutting costs by £100 million over three years, with £50 million in savings this year and the final £30 million in 2026-27. Barratt Redrow shares rose 2.13 percent or 5.50p to 263.80p on Wednesday morning, but have fallen 38 percent in the past year. According to Daily Mail - Money, Richard Hunter described the shares as having fallen by 38 percent over the last year, very much missing out on the broader revival whereby the wider FTSE 100 rose by 29 percent over that period, and by 66 percent over the last five years. He also noted that this leaves an undemanding valuation and the initial share price reaction to the update suggests some underlying support, and that it seems investors retain a conviction to look through the more immediate challenges. Travis Perkins, a building materials supplier, reported a pre-tax loss of £134.7 million for 2025, widening from 2024's £38.4 million loss.
Of course, this leaves an undemanding valuation and the initial share price reaction to the update suggests some underlying support.
Energy market dynamics have been sharply affected. International prices for LNG have jumped more than 50 percent, research shows. Clean energy technologies are not immune from supply chain disruptions stemming from geopolitical disputes, such as China's restrictions on the export of critical minerals.
Globally, China's energy dependence underscores market integration. China uses an estimated 15 to 16 million barrels of oil daily, according to various market analysts. Gulf countries are a major source of the oil China ships in, with barrels from Saudi Arabia and Iran accounting for more than 10% of its imports each, according to the US Energy Information Administration. Russian oil accounts for nearly a fifth of China's energy imports, making Moscow by far Beijing's biggest oil supplier, and China is the world's largest coal producer, accounting for more than half of global production.
Innovation and adaptation are emerging in response to energy volatility. Zero-bills homes are fitted with solar panels, heat pumps and batteries, generating more electricity than the resident uses, with excess sold back to the grid. Octopus Energy guarantees that each property will pay nothing for energy, even if it uses more than it generates, for a fixed period between five and 10 years, according to This Is Money. Octopus estimates that an average two- to three-bedroom house could save nearly £1,800 per year based on current Ofgem price cap rates. In Spain, only 11.4% of construction companies currently use artificial intelligence, compared with nearly 60% in the technology sector.
It seems that investors retain a conviction to look through the more immediate challenges and concentrate on...
Critical unknowns persist, including how long the Strait of Hormuz is expected to remain closed and what contingency plans exist for global oil shipments. The projected timeline for when build cost inflation might peak and begin to ease in the UK and Spain is also unclear, as is the extent to which the conflict will affect mortgage rates and housing affordability in the UK beyond the current increases.
Future projections remain uncertain, with inflation peaks and housing affordability concerns looming. The specific geopolitical events beyond the US-Israeli strikes on Iran contributing to the 'less certain backdrop' mentioned by Barratt Redrow are not detailed.
Corporate strategy unknowns include what specific cost-cutting measures Barratt Redrow is implementing and how they will impact its operations and workforce.