Middle East Conflict Sparks Global Energy Price Spike

The global energy market is facing a crisis as prices skyrocket due to escalating conflicts in the Middle East. The war between Yemen's Houthis and Saudi Arabia has caused chaos for the oil industry, leading to a sharp increase in petrol, diesel, and gas prices worldwide.

The global oil price has risen to over $108 per barrel, up from $70 in June, causing average petrol prices in the UK to reach 170p per litre, the highest since 2022. The cost of natural gas has almost doubled in the UK and Europe since July, with the domestic price cap set to rise by 25% in January next year.

Analysts blame a reduction in global oil and gas supplies for the price hike. Before the US-Israeli war with Iran began, about 20% of both global oil products and liquefied natural gas supplies passed through the Strait of Hormuz. However, this flow collapsed after February due to Iranian attacks on commercial shipping and energy facilities.

The situation is further complicated by the capture of strategic territory in Yemen by Houthi forces, which could disrupt another trade chokepoint at the southern tip of the Red Sea.