A barrel of Brent crude oil now costs $100 again for the first time since May – and that could mean higher prices at the petrol pump, pricier supermarket bills and even pressure on mortgage rates for millions of UK households. Oil prices surged more than 6% in a single day on 23 July 2026 after Houthi militants attacked two Saudi oil tankers in the Red Sea, escalating a conflict that has already disrupted global energy supplies for months. The jump is the latest reminder of how fragile the world’s oil supply chain is – and how quickly it can hit your everyday costs.
Oil prices are set by global supply and demand, but the current spike is driven almost entirely by geopolitics. Brent crude – the global benchmark – rose above $100 a barrel after reports that Yemen’s Houthi militia targeted Saudi vessels in the Red Sea. The Houthis are backed by Iran and have been attacking ships to enforce a naval blockade. This new front adds to the ongoing stand-off in the Strait of Hormuz, a narrow waterway used for about 20% of the world’s oil shipments, where Iran and the United States have been clashing since February 2026. A temporary ceasefire between the US and Iran had pushed prices down to $71 a barrel in early July, but that deal fell apart, and fighting resumed.
“Why oil prices hit $100 a barrel again and how it affects UK households.”
The background to this crisis is a widening Middle East war that began with US and Israeli strikes on Iran in late February 2026. In the first weeks, oil briefly hit $126 a barrel. Prices then fell as hopes of a ceasefire grew, but the collapse of talks and renewed hostilities – now including Houthi attacks on the Red Sea – have pushed them back up. The Red Sea route was being used as an alternative to the blocked Strait of Hormuz, so the new attacks threaten to strangle Saudi oil exports, according to the Financial Times and Guardian reports.
For UK readers, the immediate impact is at the petrol station. According to the RAC, petrol prices have already risen 5p a litre since the start of July, reaching almost £1.56 on average; diesel is around £1.72. In the US, gasoline has topped $4 a gallon. But the effects don’t stop at the pump. Jonathan Raymond, an investment manager at Quilter Cheviot, told the BBC that higher fuel and energy costs ripple through the economy, raising costs for businesses and feeding into the price of food and other goods. That matters because UK inflation had been falling – down to 2.6% in June – but the renewed oil spike could reverse that trend. If inflation stays high, the Bank of England may keep interest rates at 3.75% for longer, or even raise them, hitting mortgage holders and borrowers.
Q: Why does oil hitting $100 a barrel affect petrol prices? Crude oil is the main ingredient in petrol and diesel. When the cost of crude rises, refineries and fuel retailers pass on those higher costs. A $100 barrel means petrol prices at the pump typically follow upward, as we’ve seen with a 5p per litre increase in just two-and-a-half weeks.
Q: Will higher oil prices cause UK interest rates to go up again? The Bank of England has held interest rates at 3.75% for four meetings. But if higher oil prices push inflation back up, the Bank may be forced to keep rates higher for longer or even raise them. Paul Dales, chief UK economist at Capital Economics, said the Bank would “almost certainly” hold rates again, but the risk of a future hike has increased.
Q: What is the Strait of Hormuz and why does it matter? The Strait of Hormuz is a narrow channel between Iran and the Arabian Peninsula that carries about 20% of the world’s oil. Since the US-Iran conflict escalated in early 2026, Iran has effectively blocked it, forcing tankers to use longer, costlier routes. Any further disruption there, or in the Red Sea, tightens global supply and pushes prices up.
What happens next depends on diplomacy and military action. US Secretary of State Marco Rubio said Iran is “not ready to make a deal”, while Donald Trump warned of a “massive attack” on Iran. The International Energy Agency’s head Fatih Birol cautioned against complacency despite “cushioning factors” that have cooled the market so far. Experts say oil prices could drop if there are signs of real diplomacy between the US and Iran, but for now the conflict is widening, and the $100 mark may not be the ceiling.