How the Iran war affects your money and bills
How the Iran War Influences Your Finances and Bills
Fuel Costs See Sharp Increases
The ongoing conflict between the US and Iran has already begun to affect the financial landscape in the UK, particularly for drivers. Crude oil prices have surged significantly since the war started, though they remain subject to fluctuations tied to the conflict’s status and White House statements. According to the RAC, the average petrol price climbed to 158.27p per litre by 13 April, marking a rise of over 25p since the conflict began. Diesel prices have also spiked, reaching 191.5p a litre—an increase of nearly 49p from March. This means a family car filled with petrol now costs £14 more annually, while diesel has risen by £27.
RAC’s head of policy, Simon Williams, noted that the pace of price hikes is slowing, but whether costs drop depends on the outcome of peace discussions. He highlighted the Strait of Hormuz as a critical factor, stating, “It’s a highly volatile situation with much depending on what happens with the Strait of Hormuz.”
“It’s a highly volatile situation with much depending on what happens with the Strait of Hormuz,”
Earlier in March, rising fuel prices sparked a dispute between retailers and the government, with companies accusing officials of implying they were exploiting the oil surge for profit. Analysts estimate that each $10 rise in oil prices typically translates to a 7p per litre increase at the pump. Even if oil shipments resume smoothly through the Strait of Hormuz, drivers may need to wait before seeing any relief.
Home Loan Rates Rise Amid Uncertainty
As the war continues, mortgage rates in the UK have experienced a notable uptick. Lenders have swiftly increased rates due to higher funding costs and a shift in expectations about future interest rates. The average two-year fixed rate has climbed from 4.83% in early March to 5.89% currently, according to Moneyfacts. Similarly, the average five-year rate has risen from 4.95% to 5.77% over the same period.
During periods of economic instability, lenders often reduce the availability of mortgage products, limiting choices for borrowers. Moneyfacts reports that there are now approximately 1,500 fewer residential mortgage deals on the market, though over 6,000 options remain. This reduction in supply underscores the ongoing financial pressure on homeowners.
Energy Bills Face Potential Hike
While household energy bills are shielded by Ofgem’s price cap in England, Wales, and Scotland, this measure is temporary and excludes some consumers. The cap limits the maximum price per unit of energy for variable-rate customers until July. Although prices dipped slightly in early April, future developments on the wholesale energy market will shape summer bills.
Cornwall Insight forecasts that, under the current price cap, a dual-fuel household using standard energy consumption would pay £1,861 annually by July to September—up from the current £1,641. However, this projection remains subject to change. In the past, significant price spikes, such as those following the pandemic and Russia’s invasion of Ukraine, prompted government intervention through the Energy Price Guarantee (EPG) to stabilize costs.
Experts warn that the period of elevated wholesale energy prices could lead to a substantial rise in utility bills for millions. A lasting ceasefire might mitigate the peak of these increases, but the situation remains uncertain.
