(qlmbusinessnews.com . Thu 5th Mar, 2026) London, UK —
Rising Oil Prices from US-Iran Conflict Shake Global Markets and Inflation Fears
Shares in the UK and US Climb While Asian Markets Suffer Amid Ongoing Oil and Gas Volatility
In the wake of persisting uncertainties fuelled by the continuous conflict between the US, Israel, and Iran, stock markets in the UK and US experienced a rebound on Wednesday, contrasting sharply with the downturn in several Asian markets. The FTSE 100, alongside major US and European indices, saw a rise after a preceding two-day slump, whereas Asian markets faced losses for the third consecutive day.
The backdrop of these market fluctuations is the sustained high prices of oil and gas, exacerbated by disruptions in shipping across a critical maritime corridor near Iran since the onset of the conflict. This persistence in elevated energy prices has sparked concerns regarding the potential rise in the cost of goods and services globally.
David Miles, a key figure at the Office for Budget Responsibility, highlighted the potential for an uptick in UK inflation rates if the high energy prices continue over a prolonged period. However, Miles also noted that the current escalations in prices are significantly less drastic than those witnessed during the onset of the Russo-Ukraine conflict four years prior.
Despite a drop on Wednesday, Brent crude has surged by 12% since the conflict's inception over the weekend. This period has also seen attacks on critical oil infrastructure in Saudi Arabia and a halt in LNG production by QatarEnergy, one of the foremost global producers, leading to a more than 60% hike in the UK benchmark gas price since the conflict began.
With approximately a fifth of global oil and gas supply passing through the Strait of Hormuz, Iran's threats have severely hampered traffic, stranding nearly 200 tankers and driving up insurance costs dramatically.
US President Donald Trump's commitment to offer reasonable risk insurance and naval protection for oil tankers traverses these troubled waters, though received with skepticism regarding its practicality amid fears of Iranian military capabilities.
Investment strategists and analysts, including Lindsay James from Quilter, express concern over the markets' overly optimistic outlook and stress the necessity of a peace agreement over mere naval escorts as a lasting solution to the crisis. Meanwhile, the US Treasury Secretary assures of a well-supplied crude oil market, despite the regional tensions and the resultant volatility in stock and energy markets, particularly impacting Asian countries heavily reliant on Middle Eastern energy imports.
In the UK, the ongoing crisis prompts discussions on economic policy and energy security measures, with Chancellor Rachel Reeves set to engage with North Sea energy leaders to navigate the period of uncertainty. The impact of the conflict on the UK's inflation and interest rate projections also remains a critical concern, highlighting the intertwined nature of global geopolitics and financial markets. The Bank of England eagerly anticipates the outcome of these developments, with its next interest rate decision due on 19 March.
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