What drove the spike

The global benchmark surged as much as 7.1 per cent during early-morning trading on 30 April, with West Texas Intermediate jumping above $110, according to City AM. Prices later eased to around $122.8, but the direction of travel is clear.

The immediate trigger was a report that the head of US Central Command is to brief Trump on potential combat operations, according to a White House official cited by City AM. Central Command has also requested hypersonic missiles be sent to the Middle East, which would mark the first deployment of these weapons by the US military.

A ceasefire between the US and Iran has been in place since early April, but negotiations have stalled. Both sides have refused to relinquish control of the Strait of Hormuz, the narrow waterway through which roughly 20 per cent of the world's oil supply normally passes, according to International Energy Agency data. Talks scheduled for the weekend in Pakistan collapsed after Trump cancelled his envoys' trip.

The mutual blockade has reduced daily passages through the strait to near zero, according to City AM reporting. The IEA has called it the biggest supply shock in history. Trump has signalled willingness to maintain the US Navy blockade indefinitely, telling oil executives the administration could "continue the current blockade for months if needed", according to a White House official. Iran has responded by keeping the waterway shut to tankers.

Trump said: "The blockade is somewhat more effective than bombing. They are choking like a stuffed pig."

The US is also seeking forfeiture of two Iran-linked oil tankers seized by naval forces, a move that would represent a further economic escalation, as reported by City AM.

How the cost reaches UK businesses

The transmission from a barrel of Brent crude to a UK operator's cost base follows a well-worn path, but the speed varies by input.

Within 30 days, diesel and petrol prices at the pump adjust. UK wholesale road-fuel prices have tracked Brent closely since the conflict began on 28 February, with a lag of roughly one to two weeks. Hauliers, delivery fleets, and any business with a logistics-heavy model feel this first. During the 2022 energy crisis, diesel briefly topped 190p per litre; a sustained Brent price above $120 puts that threshold back in play.

Within 60 days, wholesale natural gas prices respond. The UK gas market is not directly linked to crude, but global liquefied natural gas cargoes are increasingly priced against oil benchmarks, and competition for non-Hormuz supply pushes spot prices higher. Manufacturers running gas-intensive processes, from food production to glass and ceramics, face margin compression at this stage. Heating costs for commercial premises also begin to reset.

Within 90 days, the second-order effects arrive. Suppliers renegotiate contracts, raw-material surcharges appear on invoices, and shipping costs adjust as bunker fuel bills rise. During the 2022 crisis, the Federation of Small Businesses reported that four in ten UK small firms cited energy costs as their primary threat to viability. The pattern is likely to repeat.

Standard Chartered has already registered a $190 million charge linked to the Iran conflict, as reported by City AM. That figure offers a concrete marker of financial-sector exposure, and a reminder that credit conditions for UK firms could tighten if bank provisioning continues to climb.

The $190 scenario and recession risk

Oxford Economics has modelled a scenario in which a six-month impasse at the Strait of Hormuz sends oil prices to $190 per barrel by August, according to City AM reporting. That would surpass the inflation-adjusted peak of the 1973 oil embargo.

Prior City AM reporting has referenced a £35 billion hit to UK growth already attributed to the conflict. A move to $190 would deepen that damage considerably. During the 1973 embargo, UK GDP contracted and the government imposed a three-day working week to conserve energy. The 2022 spike, driven by Russia's invasion of Ukraine, contributed to a cost-of-living crisis that pushed UK CPI inflation above 11 per cent in October of that year, according to Office for National Statistics data.

The current situation is arguably more severe in supply terms. The 2022 disruption affected Russian pipeline gas to Europe but left the Strait of Hormuz open. A full closure of the strait removes a far larger share of global supply from the market simultaneously.

Whether government support measures will materialise remains uncertain. During 2022, the Treasury introduced the Energy Bill Relief Scheme for businesses and the Energy Price Guarantee for households. No equivalent programme has been announced for the current crisis. Industry bodies have begun lobbying for intervention, but fiscal headroom is tighter than it was two years ago.

What operators should do now

The practical question for UK founders, finance directors, and operations leads is not whether costs will rise, but how quickly and by how much. Several levers are available.

Stress-test margins at $140 and $190

Modelling two scenarios, one at the current elevated level and one at the Oxford Economics worst case, reveals where breakeven points shift. Businesses that survived 2022 may find their cost bases have changed since then. Input costs, wage settlements, and debt-service obligations are all different.

Review supplier contracts

Many commercial contracts contain energy-linked escalation clauses that allow suppliers to pass through fuel surcharges. Operators should identify which contracts carry these provisions, what trigger thresholds are set, and whether renegotiation is possible before the next price leg.

Consider hedging

Fuel hedging is not solely for airlines and hauliers. Any business spending more than 5 per cent of revenue on energy or transport can benefit from fixed-price forward contracts. Brokers report increased enquiry volumes since February, and forward curves are steep, meaning the cost of locking in prices rises with each week of delay.

Build supplier diversification

The 2022 crisis taught many firms that single-source supply chains are fragile. Businesses reliant on goods shipped through or near the Strait of Hormuz should map alternative routing now. Longer transit times via the Cape of Good Hope add cost but remove the binary risk of a total blockade.

Monitor government policy

While no business relief scheme has been announced, the political pressure for intervention will intensify if prices remain above $120 for more than a few weeks. Finance directors should track Treasury statements and maintain contact with trade bodies that are feeding into policy discussions.

The 2022 energy crisis caught many UK businesses off guard. The current shock, with the IEA calling it the largest supply disruption on record, offers less room for complacency. The cost transmission is mechanical, predictable, and already in motion. The window for preparation is measured in weeks, not months.