#oil-prices

#oil-prices

The breakdown of talks between the U.S. and Iran, along with President Trump reportedly rejecting Iran's proposal for a reopening of the Strait of Hormuz, has the market losing hope for any quick resumption in oil flows.

Brent crude hit a record price since the war began on 28 February, surging more than 13% in 24 hours, marking the highest level since 2022.

The war in Iran and the resulting blockade of the Strait of Hormuz will tear a £35 billion hole in UK output over the next two years, push consumer price inflation back above 4 per cent, and force the Bank of England to raise interest rates rather than cut them.

The dollar index edged slightly higher on Tuesday as concerns about the lack of progress in the diplomatic efforts between the US and Iran reinforced safe-haven demand.

Chris Ong, Seatrium's CEO, sees the Iran conflict sharpening what specialists call the energy trilemma, or the trade-off between energy security, affordable supply, and environmental sustainability. "The situation is now even worse because of the destruction of supply, which is still not fully priced in," Ong says. "People don't understand; they have been swung between different stories every day."

President Trump's announcement to extend the cease-fire with Iran is significant for small caps, as the earlier conflict had driven oil prices up, impacting domestic businesses.

"Fuel use increases significantly at higher speeds, so even a relatively small reduction can result in noticeable savings," he stated. He added that lowering motorway speeds could improve fuel efficiency by around 10%, depending on the vehicle.