When on February 28, 2026, the USA and Israel struck Iran, oil markets reacted instantly. But British officials are now modeling a scenario where expensive oil is not a consequence of crisis, but a new normal for years to come.
According to Bloomberg, which gained access to unpublished analysis, the UK government has revised its internal oil price forecasts upward — to ~$100 per barrel through 2028. Key detail: this is the base case scenario even with a peace agreement between the USA and Iran. Previously, London had factored in six months of energy disruption after the cessation of hostilities. Now the estimate is up to 14 months for supply recovery from the region.
Why recovery will take more than a year
The closure of the Strait of Hormuz on March 2, 2026, became the largest oil supply shock in modern history: through this 33-kilometer corridor, in peacetime, approximately 20% of global oil and gas production passes. Restoring these flows after physical infrastructure damage and mine-clearing is not a matter of weeks.
"The world still does not understand the scale of the situation,"
— this view was repeated by more than three dozen oil traders, brokers and executives in conversations with Bloomberg.
Brent already tested the $126 mark in April — the highest level since Russia's full-scale invasion of Ukraine. Some Wall Street analysts and US officials have begun considering a scenario of $200 per barrel in case of prolonged strait closure.
What $100 means for Brits specifically
The House of Commons Library documents direct consequences: petrol prices have already risen, gas bills are set to increase later in 2026, and expected Bank of England rate cuts are frozen. The Bank held rates at 3.75% in April; increases now become a real option.
Resolution Foundation calculates: if prices remain at peak levels, British households will spend £11 billion more on fuel and energy in 2026 compared to the beginning of the year — this is 0.5% of aggregate household income. In the worst, but realistic scenario, government borrowing will increase by £16 billion by the 2029–2030 financial year.
UK GDP growth forecasts for 2026 have already been revised down: Barclays and KPMG give 0.7%, Oxford Economics — 0.4%, while the Office for Budget Responsibility had factored in 1.1% before the crisis.
An unexpected dimension: fertilizers and food
Oil is only part of the problem. Through the same region passes approximately one-third of global fertilizer supplies — urea and ammonia. Disruptions in their supply during spring planting season in the Northern Hemisphere are already putting pressure on food prices — an effect that British internal forecasts account for separately from the oil shock.
Chancellor of the Exchequer Rachel Reeves stated readiness to support households, but already in conditions where Labour's plans to reduce the cost of living, on which they ran in elections, are effectively postponed by an uncertain oil horizon.
The question is not whether the war will end, — but whether Britain's budgetary "safety margin," formed in autumn 2025, will hold up if $100 per barrel persists throughout the projected 14 months after peace: Resolution Foundation is already warning that this will destroy almost all the built-in reserve.
