Why events in the Middle East are pushing up costs

While the human cost of the conflict in the Middle East is being felt most sharply by those living through it, the economic effects are spreading far more widely. Here in the UK, one of the most immediate consequences has come via global energy markets, with oil prices rising sharply and growing concern over fuel and electricity costs. So what exactly is driving those increases, and how could they affect UK fleet operators and drivers in the weeks and months ahead?

What’s driving the rising cost of oil?

In simple terms, the price of oil is driven by the global balance of supply and demand. That balance is shaped by economic conditions, production levels, geopolitical risk and how easily oil can move around the world. And it is this last factor that has made the current conflict so significant for oil markets.

The Strait of Hormuz is a narrow sea passage between Iran and the Arabian Peninsula. With almost 20 million barrels of crude oil and oil products passing through it each day, it is one of the world’s most important oil routes. Although relatively little of this oil is destined for Europe, UK petrol and diesel prices are influenced by global oil markets, not just local supply. 

Brent crude, the main international benchmark, started 2026 at $60.75 a barrel. By 27 February, it had risen to $72.48, driven largely by output cuts from major producers and mounting geopolitical tension ahead of the US-Israeli strikes on Iran. It then rose sharply, topping $100 a barrel on 12 March, and has remained highly volatile as peace talks start and then falter, blockades come into effect, and rhetoric escalates on all sides.

How do global oil prices impact the UK?

A significant proportion of the crude we produce is exported for refining abroad. At the same time, we import large volumes of crude oil and refined products, particularly from the US and Norway, as well as petrol and diesel from countries including the Netherlands, the US and Kuwait. This may seem counterintuitive, but the UK lacks the modern refinery capacity needed to turn all of its crude oil into the mix of fuels we use, so we rely on other countries both to process our oil and to supply the petrol and diesel we need.

Will we run out of oil?

The UK, like all IEA member countries, is required to hold emergency oil stocks equivalent to at least 90 days of net imports. These reserves are designed to provide a short-term buffer during serious supply disruptions and help steady the markets. In the UK, these are held by major suppliers, including refiners and importers.

On 11 March, the UK joined other IEA members in a coordinated release of emergency stocks, with 400 million barrels made available in total, including 13.5 million from the UK. The last comparable action came in 2022, after Russia’s invasion of Ukraine triggered a major energy shock. But while emergency reserves can help offset temporary supply losses, their impact is limited unless normal flows resume.

Rising prices at the pump

Fuel prices have risen sharply in recent weeks. By 13 April, average petrol prices had reached 158.01p per litre, up from 131.71p in the week before the current conflict began. This increase has been tempered by the fact that UK refineries are primarily geared towards producing petrol rather than diesel. In fact, with well over half of the diesel sold at UK pumps imported, average prices rose from 141.46p to 192.06p per litre over the same period. Even if oil prices stabilise, there is usually a two-to-six-week lag before wholesale movements fully feed through, so pump prices could still increase before they begin to fall.

How will EV charging costs be affected?

The Strait of Hormuz is a major route not only for oil, but also for liquefied natural gas (LNG), with almost all LNG exports from Qatar and a significant share from the wider Gulf region passing through it.

Although most of the UK’s imported gas comes from Norway, UK prices are still shaped by international markets, and traders are pricing in the risk of tighter global supply. Even when the grid is running on a very high share of low-carbon electricity, gas still plays a crucial role in meeting overall demand and continues to heavily influence wholesale electricity prices, which in turn puts pressure on EV charging costs.

That said, the Ofgem price cap is set in advance, and many households and businesses are on fixed tariffs, so higher costs usually take longer to feed through. The latest Ofgem price cap, which came into force on 1 April 2026, was set before the current conflict began, so a typical household should still see bills fall in the short term. However, British Gas has said the next price cap period from 1 July could see a rise of around 9%, with further increases possible in October 2026 and January 2027. Fixed-term tariffs are also likely to become more expensive over time as higher wholesale prices feed through.

For drivers on specialist EV tariffs, the impact depends less on whether the tariff is designed for EV charging and more on whether it is fixed or variable:

• Default or standard variable tariffs are generally covered by the Ofgem price cap, so prices normally change only when the cap is updated.
• Fixed tariffs are not covered by the cap, so suppliers can price them separately from the capped rate.
• Smart and off-peak EV deals may still react differently to market conditions, but the key issue is the tariff structure rather than the EV branding.

Is now the right time to switch?

It would be wrong to say that a decision to switch should be based solely on a short-term spike in the cost of petrol or diesel. Vehicle suitability, access to a practical and cost-effective charging solution, and whole-life cost all matter more than any single market event. However, the latest price rises are a reminder that petrol and diesel vehicles are more directly exposed to volatility in global oil markets. This won’t change the answer for every fleet or every driver, but it does reinforce the value of reviewing whether a switch makes sound economic sense. To find out more about how we can help, just get in touch.