The looming Iran conflict threatens to compel the government to enforce energy rationing, cautioned an expert. The blockade of the Strait of Hormuz has severely disrupted oil exports from the Gulf, resulting in a surge in oil prices to approximately $106 per barrel at the start of the week.
Iran’s utilization of the strait, a vital passageway for a significant portion of the world’s oil and liquefied natural gas transportation, as a battleground by menacing to target tankers attempting to traverse it, is raising concerns about the prolonged impact.
Nick Butler, the former strategy head at BP and a past advisor to UK’s Labor PM Gordon Brown, expressed concerns about an imminent physical supply shortage. He emphasized the necessity for the government to be prepared for a notable supply deficit in the coming months, potentially leading to energy rationing.
Emphasizing the significance of oil and gas supplies for the economy, Butler urged for immediate actions, including the exploration of new oil fields in the North Sea. He stressed the need to safeguard critical sectors like healthcare and food supply and suggested that decisions on supply rationing, if necessary, should be made by the government.
Furthermore, Butler warned of potential global oil shortages triggering international competition for limited supplies, highlighting Europe’s and the UK’s heavy dependence on oil and gas imports.
In response to concerns about rationing, PM Keir Starmer assured that the government is actively ensuring adequate energy supply. The surge in oil prices has led to a quick increase in fuel costs for drivers, prompting government warnings against potential profiteering.
Simultaneously, mortgage borrowers are feeling the repercussions of the conflict, with industry reports indicating a rise in average fixed mortgage rates over the weekend. The reduction in available mortgage deals, dropping below 7,000 to 6,972, is further impacting borrowers seeking new loans.