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Oil prices soar as US and UK strike over Red Sea raids.

Brent crude reached $80 per barrel for the first time this year, as Iran-backed rebels threatened to retaliate against Western military action.

While the price has risen, it remains below the highs hit when Russia invaded Ukraine.

However, the UK government has developed scenarios that anticipate additional disruption to the economy.

According to the BBC, the Treasury has predicted that crude oil prices will rise by more than $10 per barrel and natural gas will rise by 25%.

Brent Crude, the international benchmark for oil prices in much of the globe, reached $80.71 a barrel on Friday before falling, while US West Texas crude rose 2.79% to $74.03.

The UK government is concerned that continuous attacks on Red Sea ships could have a negative impact on the UK economy, which is still struggling to thrive.

Higher energy prices risk fueling inflation just as it is starting to decline. Meanwhile, the cost of carrying containers on vessels has risen, which means that businesses may opt to pass on this cost to customers.

According to Prime Minister Rishi Sunak, the bombings caused “major disruption to a vital trade route and [higher] commodity prices”.

However, Simon French, chief economist at Panmure Gordon, noted that energy prices remain significantly lower than they were four months ago.

“At these levels, it is actually quite disinflationary for the UK economy,” he told the BBC.

He noted that when the Bank of England makes its next interest rate decision in February, oil prices are still expected to be around 20% lower than they were in the autumn.


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