Iran attacks stoke energy supply fears

By the Editorial Team · Saturday, July 25, 2026

Renewed tensions between the US and Iran, highlighted by Houthi attacks on Saudi oil tankers, have driven UK wholesale gas prices to their highest levels in months and pushed Brent crude above $96 per barrel. This surge in energy costs is likely to increase household energy bills and fuel prices in the UK, exacerbating inflation concerns amid strained European gas supplies.

Renewed conflict in the Middle East has reignited concerns over global energy supplies, driving gas and oil prices to their highest levels in months. The UK’s wholesale gas price surged to 155 pence per therm, approaching peaks last seen in March during heightened US-Iran tensions. This marks a 12 percent increase over the past week and nearly a 50 percent rise for the month.

The recent escalation stems from resumed hostilities between the United States and Iran, with Iran-aligned Houthi forces striking two Saudi oil tankers in the Red Sea. In response, President Donald Trump warned of “major military punishment,” intensifying fears of disruptions in liquefied natural gas exports from Qatar via the Strait of Hormuz—a critical chokepoint for global energy shipments.

Brent crude oil prices climbed to $96 per barrel, up from $87 a week earlier, peaking briefly above $100 on Thursday. This increase represents roughly a 33 percent rise since early July. The surge in energy costs comes amid ongoing concerns that inflation will accelerate, which could prompt central banks to maintain higher interest rates or delay planned cuts. Reflecting these worries, government bond yields increased earlier this week before easing slightly on Friday, with the yield on 10-year UK gilts retreating from a two-month high of 5.11 percent to 5.05 percent.

The impact of rising energy prices is felt broadly, including at the consumer level. European gas storage is currently below average, depleted by a cold winter and further strained by high summer demand for power generation and air conditioning. Analysts at Cornwall Insight project that recent wholesale gas price increases will offset the effect of the UK government’s 5 percent VAT reduction on electricity bills introduced by Andy Burnham. The energy price cap for households is expected to rise by approximately 2 percent starting in October.

Meanwhile, motorists in the UK face elevated fuel costs just as the school holiday travel season begins. The RAC reported average petrol prices jumping nearly 6 pence per litre over the past two weeks, with diesel rising by about 9 pence per litre. Simon Williams, head of policy at the RAC, noted that oil prices surpassing the $100 mark for the first time in two months have pushed prices at the pumps back to levels last seen in mid-June.

Despite these challenges, the UK stock market, buoyed by strong performances from leading oil companies and ongoing merger and acquisition activity, closed the week at its highest level since March. The FTSE 100 gained 1.3 percent over the week to 10,736.23, while the FTSE 250 rose 0.8 percent to 23,801.49.

In currency markets, the pound remained steady against the US dollar and the euro, trading around $1.33 and €1.17 respectively. Across the Atlantic, major US equity indexes posted modest gains during the midday session, although the overall market trend for the week pointed to losses. The Dow Jones Industrial Average rose 0.7 percent to 52,073.03; the S&P 500 gained 0.6 percent to 7,451.80; and the Nasdaq Composite advanced 0.1 percent to 25,168.30.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.