The conflict in the Middle East has disrupted global supply chains and caused price increases in a variety of categories, prompting accusations of price gouging and warnings that the worst is yet to come if the conflict persists.
Here we take a look at the impact so far.
Gasoline
Fuel prices at the pump have risen slightly in the UK and Europe since Israel and the US began bombing Iran on Saturday and much larger increases are expected. Brent crude, the global benchmark for oil prices, rose 10% to $82 a barrel on Monday before falling to $78 on Wednesday. The British AA has said that record prices could be reached in the next two weeks.
Irish taoiseach Micheál Martin said there was “no excuse” for the fuel price rise because Ireland’s oil came from the North Sea. “We don’t want any price increases,” he added. The Spanish government said it was monitoring oil prices to avoid speculative movements.
Heating oil
Some suppliers in Northern Ireland, where almost two-thirds of homes use oil for heating, have increased prices by more than a third. On February 26, the average price for 500 liters was £307, but some suppliers are now charging up to £425, the BBC reported.
plane tickets
The price of flights between Europe and Asia has skyrocketed since the closure of major hubs in the Middle East led to the cancellation of thousands of flights. Stranded passengers who tried to switch to other airlines and routes found higher fares and limited availability.
Michelle Wiese Bockmann, a commodities analyst, said in X that airlines were “stalling” people who were desperate to get home. He has been quoted fares ranging between 2,400 and 3,600 euros to get to London. “Governments must intervene and take control. This is worse than the pandemic. It is shameful,” he added.
Private jet operators have increased prices further, with one charging £20,000 per seat on a plane leaving Oman for Milan on Monday, the Financial Times reported. A charter flight from Oman to Paris was selling for 215,000 euros for a 13-seater plane, almost double the standard price.
Groceries
Supermarket bills have not yet increased, but a knock-on effect is expected from the closure of the Strait of Hormuz, disrupting shipping and effectively halting a fifth of the world’s oil and gas supply and a third of fertilizer supplies.
Grain prices are rising and Asian shrimp, dried fruits and nuts will require longer and more expensive routes to Europe, according to commodity price reporting agency Expana. The disruption of important Iranian exports of pistachios, walnuts, almonds, saffron and dates could also drive up prices.
However, if Brazil’s supply of beef and poultry to the Middle East is diverted to Europe, that could lead to lower prices for European consumers, according to the Independent Meat Suppliers Association.
Marine insurance
Major marine insurers have canceled war risk cover for ships operating in the Gulf from Thursday, but many are expected to offer to reinstate war cover on new terms. Mutual P&I coverage offered by insurers will not be affected. Marcus Baker, global head of marine affairs at insurance broker Marsh, said insurance rates could rise by 50% to 100%, or even more, from 0.25% to 0.5% to 1% of the value of the insured asset.
