MercoPress. South Atlantic News Agency

UK warns of higher inflation and backs oil reserve release amid Middle East war

She also said London, one of the world’s main maritime insurance centres, was in contact with the sector as risks to commercial shipping increased

British finance minister Rachel Reeves said on Monday that the United Kingdom was ready to support a coordinated release of international oil reserves if the Middle East crisis keeps pushing up energy prices, though no formal G7 decision has yet been taken. Reeves made the statement after joining a virtual meeting of G7 finance ministers, as oil prices remained elevated because of disruption to shipping through the Strait of Hormuz. Reuters reported that the option under discussion is a joint emergency stock release under the International Energy Agency framework.

Reeves told lawmakers that an immediate priority was to ensure oil could move safely through Hormuz, a critical route for global supply. She also said London, one of the world’s main maritime insurance centres, was in contact with the sector as risks to commercial shipping increased. Reuters reported that Reeves said Britain “stands ready to support a coordinated release” of collective reserves if required.

Despite the worsening international backdrop, Reeves said British financial markets were continuing to function normally. She warned, however, that inflation was likely to rise in the coming months because of the energy shock and wider global disruption. The message came after several days of gains in oil and gas prices that revived concern over living costs across Europe.

On the domestic front, Reeves confirmed that the regulated household energy price cap would not rise in April. In fact, Ofgem has already set the cap for the period from April 1 to June 30, 2026 at £1,641 a year for a typical dual-fuel household paying by direct debit, down from £1,758 in the January-March quarter. Ofgem described that as a 6.6% fall, equal to about £10 less a month for an average customer.

The debate over a possible use of strategic reserves remains open among industrialised economies. There was broad agreement within the G7 not to trigger an immediate release for now, while ministers left the option on the table if market conditions worsen further or if the Hormuz disruption persists. A further round of energy consultations among G7 countries is expected later this week.