Prime Minister Keir Starmer unveiled an emergency £53 million package for heating oil customers affected by price spikes due to the US-Israel war with Iran. He warned energy firms against profiteering, threatening legal action if companies have broken the law by canceling orders and hiking prices. Around 1.5 million households relying on heating oil face soaring costs, with prices per litre rising from around 62p to as much as £1.73.
Oil prices have risen over 20% to above $100 a barrel, and gas by over 50%, due to the conflict. Iran has effectively blocked the Strait of Hormuz since the US and Israel attacked the country on 28 February. Numerous other countries are involved in nascent efforts to find an off-ramp to the crisis, which has caused the price of oil to skyrocket with the closure of the Strait of Hormuz to most shipping.
Ending the war in the Middle East is the quickest way to reduce the cost of living.
Starmer hinted at reviewing the planned 5p fuel duty hike due in September, citing the Iran crisis. The government opened the door to scrapping the fuel duty hike in response to energy price rises from the war. However, Chancellor Rachel Reeves is resistant to canceling the fuel duty hike, prioritizing economic credibility.
The energy price cap protects bills until early summer, with the average household saving £117 when it comes down next month. Most UK households will be protected from the impact of rising energy prices in the short-term by the energy price cap. Analysts suggest petrol could hit £2 a litre if the conflict drags into summer, with energy prices potentially rising by over £500. The risk of high energy costs pushing up inflation means the Bank of England is now unlikely to cut interest rates this month, as had previously been expected.
The UK is a diverse, tolerant country and warned against politicians trying to divide people.
The UK will not be drawn into the wider US-Israel war with Iran, and Starmer defended his initial decision not to give the US permission to use British bases. The UK granted permission for defensive US action against Iranian missile sites from British bases. Starmer did not respond to Trump's calls to deploy warships to secure the Strait of Hormuz, instead considering mine-hunting drones.
Starmer spoke with Donald Trump about military cooperation, after Trump criticized the UK's delayed help. Finance ministers from the G7 group met virtually on Monday to discuss the crisis. The G7 discussed a possible joint release of petroleum from reserves in an attempt to reduce the economic shock of the oil price hike. Nearly all of the other G7 nations have reacted coolly at best to the US-Israeli military operation against Iran and have declined to participate. Trump has lashed out a number of G7 members and NATO allies for not responding to his calls for help in reopening the Strait of Hormuz.
Treasury officials have 'found the money' to assist heating oil households.
Green Party leader Zack Polanski called for £8.4 billion to protect energy price cap customers from bill rises after June. Shadow Energy Secretary Clarie Coutinho warned of 'shameful behaviour' from heating oil suppliers engaging in profiteering. The Iran war is a disastrous mistake that breaches international law, Germany's president said on Tuesday. Frank-Walter Steinmeier said Trump's second term marked a rupture in German foreign relations as profound as Russia's invasion of Ukraine.
The prime minister is chairing an emergency Cobra committee, which will be attended by Bank of England governor Andrew Bailey and senior ministers. Topics expected to be covered at the Cobra meeting include energy security and the economic impact of the crisis on families. Sir Keir said there was more resilience in the UK economy and the public finances than there had been at the time of the energy price shock triggered by the Ukraine invasion in 2022. Sir Keir Starmer has said he is looking at every lever that's available to government to deal with cost of living pressures caused by the Iran war.
Shameful behaviour from heating oil suppliers engaging in profiteering.
Starmer insisted the UK is a diverse, tolerant country and warned against politicians trying to divide people. The government will publish a social cohesion plan including measures to tackle extremism and promote integration.
Housing Minister Matthew Pennycook said a range of options are being assessed, including on the issue of profiteering that we're potentially seeing from fuel retailers. The prime minister told MPs he would look at what further teeth we can give the Competition and Markets Authority to deal with profiteering. Energy Secretary Ed Miliband will meet energy suppliers to discuss the impact of the Iran war on bills.
Oil prices will drop rapidly when the destruction of the Iran nuclear threat is over and were a very small price to pay.
After Iran’s supreme leader was killed in an Israeli strike at the start of the war, his son Mojtaba Khamenei was named as his successor on Sunday. Tehran said it would target US-linked energy sites across the Gulf region if the US followed through with its threat, according to Iranian state media. President Donald Trump said Monday that the US and Iran have had discussions, although Iran has denied it.
The General Secretary of the TUC supported the PM's quick action but warned more support may be needed to stave off 'Trumpflation'. The longer the war in the Middle East continues, the more likely it is there will be economic damage in the UK. The Prime Minister insisted the economy was resilient and well placed to absorb the likely impact on households and businesses.
Military strikes against Iranian energy infrastructure would be postponed for five days following productive talks with Iran.
A Downing Street spokesperson said any reports of productive talks are welcome, adding a swift resolution to the war is in the global interest and the Strait of Hormuz specifically needs to be re-opened. On Sunday, Sir Keir and Trump discussed the need to reopen the Strait of Hormuz, a vital oil shipping channel. Secretary of State Marco Rubio will travel to France this week to try to sell America’s skeptical Group of Seven allies on the strategy of the Iran war that has sent global fuel prices soaring. Rubio will attend a G7 foreign ministers meeting near Versailles outside of Paris on Friday to advance key US interests and discuss shared security concerns.
London’s FTSE 100 Index fell nearly 2% soon after opening as the Middle East conflict caused an acute supply crunch. Rising oil prices will feed through to higher costs at petrol stations. Chancellor Rachel Reeves said Treasury officials have 'found the money' to assist heating oil households.
Threatened to obliterate Iranian power plants if the strait was not opened within 48 hours.
Keir Starmer said ending the war in the Middle East is the quickest way to reduce the cost of living. No decision has been made to deploy the HMS Prince of Wales aircraft carrier to the Middle East.
Whether the UK will ultimately cancel the planned 5p fuel duty hike in September remains uncertain, as internal government debate continues. The specific legal actions the UK government will take against energy firms accused of profiteering have not been detailed, though Starmer has threatened action. The outcome of the emergency Cobra committee meeting chaired by Prime Minister Starmer is pending, with discussions on energy security and economic impact underway. The likelihood of a G7 joint release of petroleum reserves to stabilize oil prices is unclear, as no immediate action appeared likely following the G7 meeting, with the group pledging to continue to closely monitor the situation. The timeline for reopening the Strait of Hormuz and its impact on global oil supply is also unknown, though diplomatic efforts continue.