Rachel Reeves warns Iran war could lead to ‘pressure on inflation’ hitting people in the pocket amid fears that US-led conflict will drive fuel prices to record high

Rachel Reeves has warned that the US conflict with Iran could ‘put upward pressure on inflation’ in the UK, with fears that motorists could face record fuel prices at the pump.

The Chancellor told the House of Commons that he was ready to ‘support a coordinated release’ of international oil reserves to cushion the economic shock of the crisis created by the attack on Tehran and reprisals against Britain’s Gulf allies.

But he called on both sides to ‘de-escalate tensions’ amid fears of worldwide economic carnage.

Brits are being urged to drive less today due to fears that war in the Middle East will lead to soaring front-line prices, with experts suggesting petrol could reach £2 per litre.

Saudi Arabia, the largest oil supplier in the region, is said to be cutting production at two major fields in the latest negative sign from the war.

The barrel price of oil rose above $100 for the first time in years, and supply was threatened by attacks on the infrastructure of major producers in the region.

Iran has also managed to effectively close the Strait of Hormuz, through which approximately one-fifth of the world’s oil passes.

The AA and RAC have advised drivers to cut non-essential journeys and avoid hard acceleration and braking to save fuel.

The Chancellor followed Sir Keir Starmer in trying to calm markets and consumers but told MPs: ‘The movements we have already seen are likely to put upward pressure on inflation in the coming months.’

Any rise in inflation would also reduce the chances of a Bank of England interest rate cut, dealing a blow to homeowners with mortgages.

Ms Reeves said she was “taking action to ensure people pay the lowest possible price at the pump” amid ongoing conflict in the Middle East.

He also promised that MPs would hold a meeting focused on heating oil prices.

Keir Starmer is desperately trying to calm fears of a 2022-style cost of living crunch by signaling another bailout despite the fragile state of the government’s finances.

Visiting a community center in London this morning, Sir Keir insisted the economy was ‘more resilient’ than the devastation wrought by Russia’s full-scale invasion of Ukraine four years ago.

But he called for ‘de-escalation’, acknowledging that the longer the war lasts ‘the more likely its impact on our economy is’.

Sir Keir is also pushing to limit the damage to Special Relations from his refusal to support Donald Trump’s decision to launch a war on Iran.

The president dismissed rising oil and gas prices as “a small price to pay” to tame Tehran.

Mr Trump wrote on the site Truth Social: ‘Short-term oil prices that will plummet once the Iranian nuclear threat is eliminated is a very small price to pay for the United States and the World, for Security and Peace. ‘ONLY FOOLS THINK DIFFERENTLY!’

The price of a barrel of Brent crude rose almost 30 percent at some points overnight in Asian markets as traders concluded the crisis would continue.

It only took one minute for the price to increase by 10 percent, and 15 minutes to increase by 10 percent; It rose above $100 for the first time since the early days of Russia’s invasion of Ukraine in 2022.

Just last week the Treasury’s OBR watchdog predicted prices would average $63 a barrel this year.

But a defiant Mr Trump wrote on the site Truth Social: ‘Short-term oil prices that will plummet once the Iranian nuclear threat is eliminated is a very small price to pay for the United States and the World, Security and Peace.

‘ONLY FOOLS THINK DIFFERENTLY!’

During his visit this morning, Sir Keir took a different tone and said he was looking for ways to ‘mitigate the potential impact’.

“The government’s job is clearly to move forward, to look around the corner, to work with others, and the Chancellor speaks to the governor of the Bank of England on a daily basis, looking across departments within government, assessing risks, monitoring and talking with our international partners about what more we can do together to reduce the potential impact on people here and businesses here,” the Prime Minister said.

‘But it’s important to recognize that this work is necessary, because people will feel, I think you will too, that the longer this goes on, the greater the potential for impact on our economy, the greater the potential for impact on the lives and homes of everyone and every business.

‘And our job is to get ahead of that, look around the corner, assess the risk, monitor the risks and work with others on that.’