THE price of oil has reached its highest level since November as experts warned US President Donald Trump’s actions on the world stage will hit the US Dollar and the UK will see petrol prices and inflation rise.
In the wake of Trump placing a 25 per cent tariff on all nations “doing business” with Iran, Brent Oil futures are trading at more than $65 a barrel today.
The last time it was that high was two months ago – while back in mid-December, oil was as low as $59.
This comes as Trump’s administration conducted airstrikes in Venezuela and captured President Nicolás Maduro and his wife – bringing them to the US earlier this month.
And now the US is threatening to attack Iran, which has warned it will retaliate if attacked, as hundreds of protesters have now been killed in an escalating government crackdown in Tehran.
US citizens have been ordered to leave immediately and Trump has stuck 25 per cent tariffs on every state “doing business” with Iran.
Consumers and businesses will bear the brunt
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said petrol prices and inflation could go up in the UK.
He added: “The Bank of England faces a dilemma as the UK economy desperately needs stimulus, but rising oil and gas prices threaten to import inflation into the country. Consumers and businesses will bear the brunt of higher energy and transport costs.
“As a net importer of refined petroleum, the UK typically sees these costs passed directly to consumers, further dampening GDP growth. Economists estimate that a sustained 10% increase in oil prices adds approximately 0.2 to 0.3 percentage points to CPI inflation.
“Unless the current spike proves temporary, elevated fuel costs could trigger a renewed wage-price spiral, trapping the Bank of England in the classic trade-off between controlling inflation and supporting growth. Prior to this oil price surge, markets anticipated interest rates falling to 3.25% by late 2026. However, the current spike has cast significant doubt on those cuts and could even force the Bank to raise rates if oil prices remain above $65 per barrel.”
Boldness could come with a cost
Pete Mugleston, Mortgage Advisor & Managing Director at Derby-based onlinemortgageadvisor.co.uk, said Donald Trump’s actions on the world stage will hit the US Dollar.
He added: “Trump is being bold on the global stage, but that boldness could come with a cost. If countries start to worry they could become targets of US foreign policy, they may grow more cautious about holding large dollar reserves.
“That points to a continued shift toward gold in 2026 and potentially a softer Dollar over time.”
Scott Gallacher, Director at Leicester-based Rowley Turton, said the oil price is actually significantly lower than a year ago.
He added: “Despite today’s move, oil prices remain almost 20% lower than a year ago, meaning they are currently acting as a drag on inflation rather than a threat.
“On its own, this is unlikely to have any meaningful impact on UK inflation or household costs. As a result, it does not change the outlook for Bank of England interest rate policy.”
