Petrol at the pump is now nearly £1.56 a litre after oil prices surged past $100 a barrel for the first time since May, driven by escalating Middle East attacks that threaten a key global shipping route. The jump follows a 6% spike in Brent crude on 23 July 2026, as Houthi militias in Yemen warned ships carrying Saudi crude through the Bab al-Mandab strait – a narrow waterway between the Arabian peninsula and Africa – that they would be targeted. The Houthis, an Iran-backed group that controls Yemen's capital and northwestern territory, had earlier attacked two Saudi oil tankers in the Red Sea, with one vessel reported ablaze. This opens a new front in the ongoing US-led conflict with Iran, which has already choked the Strait of Hormuz, a chokepoint for about 20% of global oil supplies.
Oil prices had fallen to as low as $71 a barrel at the start of July after a temporary ceasefire between the US and Iran. But the ceasefire collapsed, and US Secretary of State Marco Rubio said the Iranian leadership was "not ready to make a deal". In response, Saudi Arabia had rerouted about 75% of its exports via a pipeline to its west coast terminal at Yanbu, sending roughly 2.5 million barrels a day south through Bab al-Mandab to customers in India and China. The Houthi threats now endanger that alternative route, which carried about 4.1 million barrels of crude and refined products per day last year – roughly 5% of the global total. Analysts at Rystad Energy warned that if the Houthi threat intensifies while the Strait of Hormuz remains largely closed, "the risk of a significant rebound in oil prices would be substantial", with some fearing a surge to $120 a barrel.
“Why oil hit $100 and how Red Sea attacks could raise UK fuel bills and inflation.”
For UK readers, the immediate impact is already visible at the forecourt. According to the RAC, average petrol prices have risen by 5p a litre since the start of July to nearly £1.56, with diesel at £1.72. But the knock-on effects go further. Higher oil prices push up transport costs for businesses, which are often passed on to households through more expensive food and other goods. Inflation in the UK had fallen to 2.6% in the year to June, helped by slowing diesel and petrol prices, but the renewed conflict threatens that progress. The Bank of England has held interest rates at 3.75% in its last four meetings, but if energy prices stay high, policymakers may face pressure to keep rates higher for longer or even raise them, which would be a blow to mortgage holders and borrowers already under strain.
Q: Why did oil prices jump above $100? Oil prices surged more than 13% in days after Yemen's Houthi militias warned they would attack Saudi vessels in the Bab al-Mandab strait, a vital chokepoint for oil exports. The Houthis also claimed they hit two Saudi tankers, with one confirmed ablaze. This came on top of the near-closure of the Strait of Hormuz due to the US-Iran conflict.
Q: How does this affect UK petrol prices and inflation? UK petrol prices have already risen 5p a litre since July to nearly £1.56, according to the RAC. Higher oil costs raise transport expenses, which can feed into food and other goods, pushing up inflation and potentially keeping interest rates higher for longer.
Q: Could oil prices go higher? Analysts warn that if the Houthi threat continues and the Strait of Hormuz remains largely blocked, oil could reach $120 a barrel. The situation depends on whether a ceasefire is reached or the US launches a "massive attack" against Iran, as President Trump has indicated he is considering.
What happens next is uncertain. US President Donald Trump said he is "close" to deciding on a "massive attack" against Iran bigger than the February strikes, while the House voted to restrict his ability to continue the war. The Houthis have threatened further action, and oil prices briefly eased to $96.63 on 24 July after the initial spike. The Bank of England is widely expected to hold interest rates again, but any prolonged oil price rise could change the outlook for inflation and borrowing costs.