Brent crude jumped 2.9% overnight — hitting nearly £106 a barrel before settling around £105 — and Trump’s direct pressure on NATO is the culprit. The president’s warning to allies? Help reopen the Strait of Hormuz or face a “very bad” future. Here’s the thing about oil geopolitics: when America turns up the heat, global energy markets feel it immediately.
The Pressure Point: Hormuz Blockade Tightens
About one-fifth of the world’s oil supply flows through the Strait of Hormuz. Since the Middle East conflict began, traffic has ground to a halt — and that’s the problem Trump is now using as leverage.
“It’s only appropriate that people who are the beneficiaries of the Strait will help to make sure that nothing bad happens there,” Trump told the Financial Times. Translation: NATO allies need to pitch in with naval support to keep shipping moving. Meanwhile, Downing Street confirmed that Prime Minister Starmer spoke directly with Trump about the importance of reopening the Strait to “end the disruption to global shipping, which is driving up costs worldwide.”
Richard Hunter, head of markets at interactive investor, summed it up neatly: “The battle lines have been firmly drawn and the oil market remains the pressure point.” Energy markets are where geopolitical tension gets priced in fastest.
Kharg Island and the Deeper Conflict
The US recently bombed Kharg Island, a 5-mile-long coral formation in the Persian Gulf roughly 27 miles from mainland Iran. Around 90% of Iran’s oil exports flow through it — so each strike sends shockwaves through global supply.
Ipek Ozkardeskaya, senior analyst at Swissquote, warned that “the bombing of Kharg Island – and the continued attacks between the parties – suggests the conflict is not close to an end.” In other words, this isn’t a quick pause in tensions. It’s a deepening standoff, and that means sustained upward pressure on crude prices.
For UK households already watching inflation climb, that’s a problem. Oil shocks feed through to heating costs, petrol pump prices, and eventually broader price pressures — precisely the headwind the Bank of England didn’t need right now.
The UK’s Squeeze: Interest Rates Hold While Inflation Rises
The timing makes this worse. The Bank of England, previously tipped to cut rates, is now expected to hold steady at 3.75% when it meets this week. Ozkardeskaya put it bluntly: “The British economy clearly needs help: recent data showed that the UK economy didn’t grow at all in January… Unfortunately, the UK may not get that help just yet.”
An oil shock on top of stalled growth is exactly the squeeze UK businesses and households didn’t need. The Prime Minister is scrambling with a £50m energy support package for households using heating oil, but that’s a plaster on a structural problem. Meanwhile, Pat McFadden, the Work and Pensions Secretary, is unveiling a scheme to compensate employers for hiring NEETs (nearly 1 million jobless young people in the UK). Worth watching — but insufficient if energy costs spike faster than these schemes can respond.
The Bottom Line
Trump’s push on NATO to reopen the Strait isn’t just foreign policy theatre — it’s a direct bet on energy prices staying elevated. Oil at £105 isn’t yet a crisis price, but it’s a warning shot. Every day the conflict drags on and naval tensions remain high, that squeeze on UK households tightens. Watch this space — central banks across the week (including the Federal Reserve) will be watching crude prices as closely as employment data.
FAQ
Why is the Strait of Hormuz so important for oil prices?
One-fifth of the world’s seaborne oil passes through it. When traffic halts due to conflict, that supply disruption flows directly into global crude prices. A blocked Strait is essentially an OPEC-style supply cut, but with geopolitical risk baked in instead of calculated production strategy.
How does Trump’s pressure on NATO change anything?
Trump is effectively asking allied navies to enforce freedom of navigation through the Strait — reducing conflict risk and allowing tankers to move freely. If NATO steps in, supply pressure eases and crude prices stabilise or fall. If not, crude stays elevated.
What does an oil spike mean for UK inflation?
Oil shocks feed through to petrol, heating, and transport costs within weeks. That pushes inflation back up, forcing the Bank of England to keep interest rates higher for longer. For savers, that’s good. For borrowers and the broader economy, it’s a headwind.
Is the UK really at risk from this?
The UK imports significant energy and is already squeezed by stalled growth. An oil shock on top of that creates a stagflation risk — weak growth with rising prices. The £50m heating support package helps, but isn’t enough if crude climbs much further.
What happens next?
Watch this week’s central bank meetings (Bank of England, Federal Reserve). If Trump makes concrete progress on reopening the Strait, crude could ease. If tensions escalate further, expect oil to climb toward £110+. The next 7-10 days will be telling.
DISCLAIMER
Effective Date: 15th July 2025
The information provided on this website is for informational and educational purposes only and reflects the personal opinions of the author(s). It is not intended as financial, investment, tax, or legal advice.
We are not certified financial advisers. None of the content on this website constitutes a recommendation to buy, sell, or hold any financial product, asset, or service. You should not rely on any information provided here to make financial decisions.
We strongly recommend that you:
- Conduct your own research and due diligence
- Consult with a qualified financial adviser or professional before making any investment or financial decisions
While we strive to ensure that all information is accurate and up to date, we make no guarantees about the completeness, reliability, or suitability of any content on this site.
By using this website, you acknowledge and agree that we are not responsible for any financial loss, damage, or decisions made based on the content presented.
