Iran oil attacks trigger 35% gas price spike – and warning of interest rate rises

Following Iran’s attack on energy fields in the region and the “serious escalation” of the war, Britain, which could raise inflation and interest rates, will “increase” defense support to the Gulf countries.

The price of Brent crude rose as high as $119 a barrel, and European gas prices briefly rose 35 percent after Iran hit Qatar’s Ras Laffan energy hub and other Middle East oil and gas infrastructure with missiles.

Interest rates were kept at 3.75 per cent instead of the previously expected cut, as the Bank of England warned that the war could push inflation up to 3.5 per cent by July due to rising energy bills and rates could rise, creating misery for homeowners.

It came like this:

Iran’s attacks were in retaliation for Israel’s attack on the vital South Pars gas field; This attack was condemned by Gulf countries as well as Tehran. This was the first attack on a power generation facility so far in the war. Tehran has fired missiles at several energy facilities in the Gulf, including a Saudi oil refinery, Qatari gas facilities and two oil refineries in Kuwait.

Sir Keir Starmer and Emmanuel Macron called for de-escalation, while President Trump threatened to “massively blow up” the South Pars facility if Iran did not stop retaliatory strikes, repeating his claim that US forces had “destroyed” Iran’s navy and army, adding that the war was “massively ahead of schedule”. He denied there were plans to send more American troops to the region.

British Defense Secretary John Healey said Tehran’s tit-for-tat responses threatened to further destabilize the region and European economies. Describing them as a “serious tension”, he added: “They are further destabilizing the region and we will increase the defense support we can offer to these Gulf countries.”

British forces are already deployed to the Middle East; RAF jets fly defensive sorties across the Gulf against Iranian drones and British air defense systems protect critical infrastructure in Saudi Arabia. UK military planners also joined US Central Command to help formulate proposals to open the Strait of Hormuz, a critical trade route for the world’s oil and gas. But there were signs of growing frustration with Washington’s war aims in the Gulf states, with Oman’s foreign minister claiming the conflict was President Trump’s “biggest miscalculation”.

“This is not America’s war,” Badr Albusaidi said in the harshest attack on Washington’s foreign policy ever made by a Gulf state, and criticized Mr. Trump for supporting Israel. Don’t write Economist, He appealed to American allies to help navigate the conflict, which has continued for a third week despite the United States and Israel’s stated goal of provoking regime change in Tehran or halting its nuclear program not being achieved.

Meanwhile, the Bank of England has warned it may be forced to raise interest rates if the war continues to increase inflation and unemployment. Governor Andrew Bailey said the impact was already being felt by consumers as oil prices rose and he was “ready to act as necessary to ensure inflation remains on track to meet the 2 per cent target”. This will pave the way for a rate hike at the end of April.

Bets in financial markets point to a 50/50 chance that the UK will face higher interest rates from next month, with the possibility of two more rate rises by the end of the year.

Danni Hewson, head of financial analysis at AJ Bell, said: “Markets are now pricing in an almost 50 per cent chance of rates rising to 4 per cent at the April meeting, with the potential for two additional rate hikes by the end of the year. But no one has a crystal ball. No one knows how long the conflict will last or how much damage will be done to critical energy infrastructure when it is over.”