UK backs global oil reserve release as war on Iran drags on
Chancellor Rachel Reeves says Britain would support an emergency release of stockpiles by the International Energy Agency after Iran effectively shut the Strait of Hormuz, warning the disruption could drive inflation higher.
The UK is ready to support the release of international oil reserves following the Iranian war, Chancellor of the Exchequer Rachel Reeves said on Monday.
In a statement to lawmakers in the House of Commons, Reeves said she had discussed the situation earlier with finance ministers from the G7 group of leading economies.
She said the UK would back moves by the International Energy Agency to release emergency oil stockpiles if needed.
Reeves warned that the conflict in the Middle East could push up prices in the UK, telling lawmakers that the situation was likely to put “upward pressure on inflation.”
She reiterated measures that the government has already taken to help with fuel costs since entering office but did not announce any new policies.
Her speech included a warning to petrol station operators not to take advantage of the crisis by raising prices unfairly.
Reeves also said the government was discussing support for households that rely on heating oil.
She also confirmed extra financial support for UK military actions in the region.
“I am proud to be the chancellor that is delivering the biggest uplift in defence spending since the end of the Cold War, and I am committed to giving our military the resources that they need,” she said.
“That is why I can confirm today that I approved access for the Ministry of Defence (MoD) to the special reserve to deploy additional capabilities in the Middle East, meaning that no net additional costs of these operations will be funded by the MoD but instead will be funded by the Treasury.”
Iran has effectively closed the Strait of Hormuz. The strategic waterway linking the Gulf with the Arabian Sea normally handles about 20 million barrels of oil shipments daily and around 20 percent of global liquefied natural gas (LNG) trade, most of which is destined for Asian markets.
The disruption is forcing exporters to search for alternative shipping routes while also cutting off the region’s large exports of crop nutrients used in fertiliser production.
The supply shock, combined with rising energy and freight costs, is expected to increase pressure on global food supply chains and contribute to higher food prices worldwide.