Oil price spike and Strait of Hormuz risk: What it means for UK businesses

There was an oil price spike last week due to rising US-Iran tensions and fears over potential disruption in the Gulf, then it edged lower on Monday, 23 February, as markets weighed a further round of US-Iran talks and wider economic uncertainty. Reuters reported Brent at $71.03 per barrel on Monday morning (23 February), after both Brent and WTI had risen more than 5% over the previous week.

For UK businesses, this is not just a petrol story. An oil price spike can affect transport costs, supplier pricing, and confidence across energy markets. The key issue right now is not only the level of prices, but the fact that the market is highly headline-driven, which makes budgeting and renewal decisions harder. Reuters quoted analysts saying oil price direction is unclear, but volatility is effectively guaranteed while uncertainty remains high.

This blog explains why the Strait of Hormuz matters, where UK businesses may feel the impact of an oil price spike first, and what practical steps you can take while events unfold.

Why the Strait of Hormuz matters to UK businesses

The Strait of Hormuz is one of the world’s most important energy shipping routes. The US Energy Information Administration (EIA) says flows through the strait in 2024 and Q1 2025 accounted for more than one-quarter of global seaborne oil trade and about one-fifth of global oil and petroleum product consumption. The EIA also notes that around one-fifth of global LNG trade transited the Strait of Hormuz in 2024, mainly from Qatar.

That scale is why markets react quickly to developments in the region. Even if physical supply is not disrupted, the risk premium can move prices, creating an oil price spike.

For UK businesses, the practical point is simple. You do not need to buy oil directly from the Gulf to feel the effect. Global energy markets are connected, and volatility in one area can feed through to fuel, freight, and supplier pricing elsewhere.

How an oil price spike affects UK business costs

The first impact of an oil price spike is often operational rather than immediate changes to your electricity bill.

If your business relies on fleets, deliveries, couriers, or regular transport, diesel and freight costs can move quickly when an oil price spike occurs. In some cases, this appears as direct fuel spend. In others, it shows up as surcharges or revised rates from logistics partners.

Manufacturers and processors can also feel pressure through oil-linked inputs such as packaging, plastics, chemicals, and lubricants. Hospitality and food businesses may be affected through chilled logistics, delivery costs, and supplier price reviews.

Even where costs do not rise overnight, volatility can still create problems. Supplier quotes may be held for shorter periods, budgets become harder to lock in, and procurement decisions carry more timing risk.

Weekend update: what changed and what did not

The weekend headlines may have sounded more alarming because the geopolitical backdrop remains tense. Reuters reported that the US and Iran are scheduled to hold a third round of talks in Geneva on Thursday, while concerns about possible military conflict remain in the background.

What changed on Monday was the market reaction in that moment. Oil prices moved lower as traders factored in the prospect of talks and broader demand concerns, including fresh tariff uncertainty. Reuters reported Brent down more than 1% in early Monday trading.

What has not changed is the underlying risk of an oil price spike. The Strait of Hormuz remains a critical chokepoint, and prices may continue to react sharply to new developments. For UK businesses, this remains a volatility risk story, not an “all clear” moment.

Could UK gas and electricity prices become more volatile?

Oil and UK electricity are not the same market, but businesses can still see the knock-on effects of an oil price spike through wider energy-market sentiment and gas pricing.

Ofgem’s wholesale market indicators are a useful UK reference point because they track wholesale forward and day-ahead gas and electricity price trends. Ofgem notes that wholesale energy costs are the largest component suppliers face when buying energy, and that day-ahead markets can be very volatile.

What this means in practice is straightforward. If you are on a fixed contract, your current rates may not change overnight. If you are approaching renewal the market you renew into may be more volatile than it was a few weeks ago.

Practical steps UK businesses can take right now

Start with contract clarity. If you are not sure whether you are fixed, flexible, or out of contract, check now. If you have multiple sites, map all renewal dates in one place. Businesses are often more exposed than they realise, simply because contracts are scattered.

Next, pressure-test your costs. You do not need a complicated model. A simple sense-check of what higher fuel, freight, or supplier charges would do to margin can help you decide what to prioritise.

Then focus on what you can control, especially consumption. In volatile conditions, reducing avoidable usage is often the fastest win. Out-of-hours usage, high baseload, and poor controls can quietly drain budget whether prices rise or fall.

If your contracts are due in the next 3 to 6 months, avoid leaving decisions to the last minute. Volatile markets reduce room for manoeuvre, and early planning gives you more options.

Finally, check a small set of indicators weekly rather than reacting to every headline. Watch oil for sentiment, and use Ofgem’s wholesale indicators for UK gas and electricity context. 

FAQs

Has the oil price spike eased?

Slightly on Monday, yes. Reuters reported Brent at $71.03 per barrel on 23 February after falling more than 1% in early trading, but prices had risen more than 5% over the prior week. 

Does that mean the risk is over?

No. The market eased on the prospect of further talks, but the geopolitical backdrop remains tense and headline-sensitive. Reuters also reported ongoing concerns about conflict risk even as talks were scheduled. 

What happens if the Strait of Hormuz is disrupted?

The Strait of Hormuz carries a significant share of global oil and LNG trade. Any serious disruption could tighten supply and increase price volatility across global energy markets. 

Which UK businesses are most exposed?

Businesses with heavy transport or fleet costs often feel the impact of an oil price spike first. Manufacturers, food businesses, hospitality operators, and multi-site organisations can also be exposed through supplier pricing, freight, and energy renewals.

What should UK businesses do while markets are volatile?

Focus on contract clarity, renewal planning, and reducing avoidable consumption. These are practical steps that improve resilience whether prices rise again or settle down.

If you want help making sense of your position

If your business is concerned about an oil price spike, rising costs or volatility, the best first step is a clear view of your contracts, renewal dates, and usage patterns.

If you want us to sense-check your current position, map renewals across sites, or identify quick wins to cut avoidable usage, contact our team. We will keep it practical, clear, and jargon-free.