Will the ceasefire have any impact on UK fuel and food prices?

Will the Ceasefire Have Any Impact on UK Fuel and Food Prices?

The announcement of a two-week ceasefire has triggered a brief, short-lived relief in the global economy. Stock markets saw a sharp uptick, and crude oil prices dropped significantly. However, analysts caution that this may not translate into immediate savings for everyday consumers. Concerns remain about the long-term effects of the conflict, which have already disrupted supply chains and raised costs.

Over the past month, vessels transporting oil, liquefied natural gas, and fertiliser have faced blockades at the Strait of Hormuz. Additionally, damage to infrastructure in the Gulf has slowed production. Even if the ceasefire holds and a peace agreement is reached promptly, experts estimate it will take several months to restore normal operations. Crude oil prices, though down today, are still above pre-war levels, meaning drivers might not see a substantial reduction at the pump soon, according to the RAC.

Simon Williams, head of policy at the RAC, highlights ongoing uncertainty. He notes that smaller independent fuel stations—those purchasing oil on a daily basis rather than in advance—could potentially lower prices faster. “The outcome hinges on the ceasefire’s stability, the free movement of oil through the Strait of Hormuz, and the broader impact on Gulf oil production,” he explains. “Sustained lower prices over weeks are essential to reduce wholesale fuel costs meaningfully.”

Rachel Winter from Killik & Co adds that predicting a rapid drop in fuel costs is challenging. “It may take at least a few weeks, if not months, for pump prices to stabilize,” she says. Jet fuel, meanwhile, remains roughly twice its pre-war value. Willie Walsh of IATA warns that even with improved traffic through the strait, it will take time for supplies to meet demand. Airlines have already raised fares or cut routes, with passengers facing higher costs in the interim.

Alan Gelder of Wood Mackenzie underscores the need for full supply chain recovery. He states that refining facilities and transport networks must return to normal, a process expected to take weeks rather than days. The fertiliser crisis, which sees a third of global supplies pass through the Strait of Hormuz, has already driven up costs. This has led to increased expenses for UK food transport and for farmers relying on costly diesel, as well as greenhouse operators facing higher energy bills when the price cap resets in July.

Dr. Liliana Danila of the Food and Drink Federation notes that the ceasefire does not eliminate long-term uncertainty. She estimates that Gulf supply chains and energy infrastructure could take six months to a year to fully recover. This means UK food inflation is projected to reach at least 9% by year’s end, even if the conflict ends soon. Current households under Ofgem’s price cap have been shielded from the recent energy price surge, but the cap’s reset in July could bring sharp increases.

Dr. Craig Lowrey from Cornwall Insight points out that while a ceasefire eases immediate pressure on gas markets, it doesn’t fully resolve the issue. “If the strait remains open, prices may ease by July, but unless they fall below pre-conflict levels, wholesale price hikes from March and early April will still affect bills,” he says. The government has pledged support tied to household income, though this may arrive as late as autumn.