Will $100 oil create a crisis?

Oil is back above $100 a barrel. But when does a higher oil price stop being just another headline and become a genuine crisis for the UK economy?

In this video, I explain why the answer isn’t today, but it may not be very far away.

The latest rise in oil prices is not an isolated event. It is the consequence of the continuing conflict in the Middle East, the disruption in the Strait of Hormuz, and growing threats to shipping through the Red Sea and the Suez Canal. These are some of the world’s most important trade routes, and when they are disrupted, the consequences spread rapidly throughout the global economy.

I explain why these problems take time to work their way through global supply chains, why shortages of fuel, industrial gases and key raw materials may emerge over the coming months, why inflation could return, and why recession becomes much more likely if governments fail to prepare.

Most importantly, I ask when the tipping point arrives. Could Britain muddle through the summer? Does the real danger begin in September? Or is October the moment when businesses and households start to feel the full impact of rising oil prices and disrupted international trade?

The issue is not simply the price of petrol or diesel. If shipping routes remain under pressure, transport costs will rise across the economy. Businesses will pay more to move goods, manufacturers will face shortages of essential inputs, and consumers are likely to see higher prices in the shops. This is the sort of external supply shock that interest rate changes cannot solve and that governments need to plan for well before it arrives.

The UK currently has no obvious plans in place to deal with this crisis. Other countries have. They have taken steps to strengthen their energy security. We seem to be waiting for markets to solve the problem. That is not a strategy when markets themselves are already being disrupted by war. Our government needs contingency plans for fuel supplies, essential industries, public transport, healthcare, and the wider economy if it is to minimise the damage, and we need to know what they are. 

This isn’t simply about the oil price. It’s about inflation, energy security, economic resilience and whether the UK government has any credible plan if the Middle East conflict continues to disrupt world trade. If these risks continue to grow, the consequences could affect every household and every business in Britain.