US–Iran escalation: What the Strait of Hormuz energy risk means for oil prices and UK business energy markets

What happened over the weekend

Over the weekend, the situation between the US and Iran escalated significantly, with reports of further attacks and retaliation across the region.

For energy markets, the key shift is that the risk moved from political tension to real-world disruption signals, particularly around shipping, due to the Strait of Hormuz energy risk.

What happened to oil prices

Oil reacted immediately as markets reopened.

Reuters reported oil prices surged, with Brent crude peaking at $82.37 per barrel before easing back, and WTI also spiking.

This matters because oil is where geopolitical risk often shows up first. Even before there is a confirmed long-term supply shortage, traders build in a “risk premium” when the probability of disruption rises.

Why UK business energy users are watching the Strait of Hormuz

If you are a UK business energy user, the phrase you will keep hearing is the Strait of Hormuz and the Strait of Hormuz energy risk. The reason is simple: it is one of the world’s most important energy shipping routes.

The US Energy Information Administration estimates flows through Hormuz are the equivalent of around 20% of global petroleum liquids consumption, and around 20% of global LNG trade also transits the strait.

When markets worry about the Strait of Hormuz energy risk, they worry about speed and scale. Even short-lived disruption can trigger sharp price moves because it changes what buyers think might happen next.

Has anything already happened in or around Hormuz

Yes. Over the weekend, Reuters reported multiple signals that shipping behaviour changed materially, giving further rise to the Strait of Hormuz energy risk:

• Hundreds of vessels, including crude and LNG tankers, were reported anchoring or stationary around the Gulf and on both sides of the Strait of Hormuz, based on shipping data.
• Reuters also reported three tankers were damaged and one seafarer was killed as the conflict escalated, and warned of rising operational and insurance risks.
• Separate Reuters reporting also described some oil and gas players suspending shipments via Hormuz, alongside reports of vessels receiving warnings that passage was not allowed.

These kinds of developments are exactly what creates the volatility surrounding the Strait of Hormuz energy risk. Markets do not wait for a formal “closure” announcement to move.

How oil and shipping risk can affect UK business energy markets

UK businesses are not buying Gulf crude directly in most cases, but that does not mean the UK is insulated from risk pricing.

Here is the chain to understand:

• Oil spikes on disruption risk
• Shipping risk rises (delays, re-routing, insurance premiums)
• Global gas and LNG sentiment tightens when shipping routes are in play (even if physical supply is still flowing)
• UK wholesale gas reacts, and UK wholesale power often follows because gas remains a key price driver in the UK market

Even without an immediate physical shortage in the UK, the UK wholesale market can still move on risk premium and sentiment.

Two scenarios on the Strait of Hormuz energy risk: what to expect next

Scenario A: escalation and sustained disruption risk

If the situation escalates further, the biggest market sensitivity remains shipping through Hormuz.

If tanker flows do not normalise quickly, analysts have warned oil could be pushed above $100 per barrel.

In this scenario, expect:

• More volatile UK wholesale gas and power, driven by global risk pricing rather than a neat supply-and-demand story
• Wider spreads and faster intraday moves, as markets reprice each new headline
• Knock-on cost pressure beyond energy, such as freight and distribution, particularly if insurance costs rise or re-routing becomes more common

The key point is not just “higher prices”. It is the speed and unpredictability of moves that makes decision-making harder.

Scenario B: cooling tensions and partial unwind

If tensions cool and shipping behaviour normalises, the risk premium can unwind. Markets often pull back quickly when the perceived probability of disruption falls.

In this scenario, expect:

• Oil to ease from peaks, though it can remain reactive for a period
• Gas and power volatility to reduce, but not necessarily return to calm immediately
• Choppy trading while markets test whether the risk has genuinely passed, or simply paused

We will follow up with more practical procurement actions once we can see how UK wholesale gas and power settle through today.

What we are watching today

Until the UK market has fully digested the weekend news regarding the Strait of Hormuz energy risk, the most useful thing business energy users can do is stay close to the signals that move pricing:

• Whether shipping continues to pause or re-route around Hormuz
• Whether insurers and shippers price in higher war-risk premiums
• Whether oil holds its risk premium or starts giving it back
• How European gas reacts, and whether that feeds into UK wholesale pricing

Concerned about what Strait of Hormuz energy risk could mean for your costs?

If you want a quick sense-check of how market volatility might affect your sites or contracts, get in touch and we’ll talk it through.