Oil rises to $105, threatening UK household budgets and economic growth
Brent crude climbed from $97.92 to $107.63 as Red Sea tensions escalated on Tuesday through Thursday, with Friday's drop to approximately $105 leaving consumers facing higher costs.
Prices of Brent crude jumped from $97.92 to $107.63 between Tuesday and Thursday amid escalating Red Sea tensions. By Friday, the price settled slightly lower at around $105 per barrel, a significant increase from the $70 level seen in late February when the Iran war began. Peter Dixon, a senior economist at the UK-based National Institute of Economic and Social Research, warned that this rise would immediately impact petrol and diesel prices. Higher fuel costs will raise production and transport expenses across the economy. Dixon noted that while this situation differs from the 2022 energy shock, it could complicate the UK's disinflation process. Household disposable income growth is expected to remain near zero in 2027, meaning renewed inflation pressure could push real income growth into negative territory for the first time since 2022.
