Oil Prices Surge to Four-Year High Amid Iran War Escalation Fears
On April 30, 2026, international oil prices jumped to their highest level since 2022 following reports that the US military is preparing new plans for potential action against Iran. The news came as peace talks appeared to have stalled and the critical Strait of Hormuz waterway remained effectively closed.
Brent Crude Briefly Tops $126 Per Barrel
Brent crude rose by almost 7% to more than $126 (£94) a barrel at one point during Thursday trading — the highest since Russia’s full-scale invasion of Ukraine in 2022. However, the price then fell back sharply to around $114 later in the day.
The dramatic swing was partly attributed to the expiry of the June Brent futures contract on Thursday, which contributed to the volatility, according to Naveen Das, senior oil analyst at Kpler. The more active July contract was trading lower at around $110 a barrel.
Strait of Hormuz Remains Closed
About 20% of the world’s oil and liquefied natural gas (LNG) normally passes through the Strait of Hormuz. Since the start of the US-Israeli war with Iran on February 28, the waterway has been effectively closed, sending global energy prices soaring.
Iran retaliated against US-Israeli airstrikes by threatening to attack ships in the waterway. The US said it would blockade Iranian ports for as long as Tehran continues to threaten vessels attempting to use the Strait.
Global Ripple Effects
The oil price surge has triggered wide-ranging consequences across the global economy:
UK fuel prices: According to motoring group RAC, petrol currently costs an average of 157p a litre — 24p higher than before the war began. Diesel stands at 188.5p per litre, up 46p. RAC head of policy Simon Williams said that “our analysis of wholesale costs shows petrol is now more expensive for retailers to buy than at any time since the war began.”
Aviation: Some airlines have already begun raising fares or reducing flight schedules.
Agriculture: Fertiliser prices have started to increase, which could have knock-on effects on food prices. With Asia’s planting season underway, the closure of the Strait of Hormuz and Chinese restrictions have hit fertiliser supply chains.
Bank of England Warns Rates Could Rise
Meanwhile, the Bank of England voted to hold interest rates at 3.75% at its April 30 meeting, but signalled that rates could rise later this year if oil prices remain elevated.
Governor Andrew Bailey told the BBC the jump in energy prices since the conflict started had been “a very big shock” and warned of the disproportionate impact on lower-income households.
The Bank outlined three scenarios:
- Scenario A: Energy prices fall back, CPI inflation rises to 3.6% by year-end before dropping below 3% by autumn next year.
- Scenario B: Energy prices fall back more slowly, inflation reaches 3.7% this year and remains elevated for longer.
- Scenario C (most adverse): Oil stays above $120/barrel for the rest of the year, inflation peaks at 6.2% early next year, potentially triggering up to six rate rises to 5.5%.
Bailey said he placed more weight on Scenario B.
Iran’s Supreme Leader Responds
Iran’s Supreme Leader Mojtaba Khamanei issued a statement on Thursday saying Tehran would secure the Strait of Hormuz and eliminate “the enemy’s abuses of the waterway.” The statement also described a “new chapter” for the region taking shape since the start of the US-Israeli war with Iran on February 28.
Axios reported, citing anonymous sources, that US Central Command’s proposed wave of strikes would likely include infrastructure targets. A separate plan focused on taking over part of the Strait of Hormuz to reopen it for commercial shipping — a move that could involve troops on the ground.
Sources: BBC News