Donald Trump’s extraordinary decision to publish a map labelling the Strait of Hormuz “new US territory” might have been intended to frighten Iran. Instead, it underlined how little progress Washington has made in reopening one of the world’s most important trade routes.
The declaration has no standing in international law and has not persuaded commercial shipping that the Strait is safe. Traffic remains around 90% below pre-conflict levels, with fewer than 20 commodity vessels passing through during the most recent weekend.
For Britain, this is no distant dispute between Washington and Tehran. Every additional week of deadlock threatens British household finances, businesses, jobs and economic growth.
Britons are already paying the price
Approximately 20 million barrels of oil used to pass through the Strait each day. Nearly one-fifth of the world’s liquefied natural gas trade also depended upon it.
Britain may not buy all its energy directly from the Gulf, but that provides little protection. Oil and gas are traded internationally. When global supplies fall, wholesale prices rise everywhere, including here.
Brent crude is currently trading at around $93 a barrel, approximately 25% higher than when the US-Israeli war with Iran began in February. The disruption has been especially damaging to refined fuels, with pressure on global supplies of diesel and aviation fuel.
British motorists have already felt the consequences. Analysis by the Energy and Climate Intelligence Unit found that petrol had risen by approximately 27p a litre and diesel by 43p compared with pre-conflict prices.
For a driver filling a typical 55-litre family car, that means paying roughly £15 more for petrol or nearly £24 more for diesel every time the tank is filled.
Those increases do not stop at the petrol pump. Diesel powers vans, lorries, agricultural machinery, construction equipment and much of Britain’s distribution network. When diesel rises, the cost of delivering almost everything rises with it.
Supermarkets pay more to transport food. Builders pay more to move materials and operate machinery. Tradespeople spend more travelling between jobs. Care workers, taxi drivers and delivery businesses see their margins squeezed. Eventually, those additional costs are passed on to customers.
Higher heating and electricity bills
The gas shock may take longer to reach households, but it could be equally painful.
Qatar is one of the world’s largest exporters of liquefied natural gas, and almost all its LNG shipments must pass through the Strait of Hormuz. Britain increasingly relies upon imported LNG to help balance its energy system, particularly when demand rises during the winter.
If Gulf shipments remain restricted, Britain must compete with European and Asian buyers for supplies from elsewhere. That drives up wholesale gas prices, which eventually feed into domestic electricity and heating bills.
The Ofgem energy price cap has already risen by 13% amid the disruption. If the Strait remains paralysed as winter approaches, another round of higher household bills becomes increasingly difficult to avoid.
That would hit pensioners, low-income households and families living in poorly insulated homes hardest. It would also increase pressure on the Treasury to provide further energy support at a time when the public finances are already strained.
Inflation, mortgages and jobs
The wider economic consequences could be still more damaging.
UK inflation reached 2.9% in July, its highest level for four months. A prolonged energy shock would push up transport, heating, manufacturing and food costs, making inflation harder to control.
The Bank of England has warned that adverse oil-supply shocks have a larger and more persistent effect when inflation is already elevated. The Office for Budget Responsibility has suggested that a sustained energy-price surge could add approximately one percentage point to UK inflation.
That matters because higher inflation can delay interest-rate reductions or even force the Bank to consider raising rates again. Millions of Britons could therefore pay twice: first through dearer fuel, food and energy, and then through higher mortgage, rent and borrowing costs.
Businesses would also suffer twice. They would face higher operating costs while customers, with less disposable income, cut their spending.
The smallest firms are especially vulnerable. A large company may hedge energy costs or absorb a temporary fall in its margins. A small haulier, independent shop, rural manufacturer or family-run hospitality business often cannot.
If the Strait remains deadlocked, some firms will delay investment, reduce working hours, abandon recruitment or close altogether. What begins as a shipping crisis thousands of miles away could become a British jobs crisis.
Britain needs more than American theatre
The United States has so far failed to restore normal commercial passage by either military pressure or diplomacy. Drawing a circle on a map does not escort a tanker, insure a cargo or reduce the price at a British petrol station.
The UK Government therefore needs a strategy based on British interests, not American theatrics.
Its immediate priority should be to work with Oman and other credible intermediaries to secure a negotiated maritime arrangement. Britain should also press for coordinated action through the United Nations and the International Maritime Organization, while helping to establish reliable monitoring and protected commercial corridors.
Diplomacy should be supported by naval capability. The Royal Navy can contribute escorts, surveillance, mine countermeasures and maritime security expertise to a properly constituted multinational operation. Britain’s forces should not, however, be committed to a loosely defined mission to “seize” the Strait without clear objectives, sound legal authority and an honest assessment of the risks.
Military action could open the waterway, but it could also provoke attacks on shipping, Gulf energy installations and British forces, including those based at RAF Akrotiri. The legal basis must also be stronger than a broad invocation of Article 51 of the United Nations Charter. Self-defence is not an all-purpose authority for launching an offensive operation.
The Government must simultaneously strengthen Britain’s economic defences. That means protecting strategic fuel stocks, monitoring profiteering, preparing targeted help for vulnerable households and energy-intensive businesses, and accelerating efforts to reduce Britain’s exposure to imported fossil-fuel shocks.
Deadlock is not a neutral option
There is no cost-free choice.
Intervention carries military and diplomatic risks. But allowing the Strait to remain effectively paralysed carries an escalating economic price: higher petrol and diesel costs, rising energy bills, more expensive food, stubborn inflation, delayed interest-rate cuts, weaker growth and lost British jobs.
Iran cannot be permitted indefinitely to determine which ships may use an international waterway or what they must pay for passage. Nor should Britain pretend that the crisis can be left to Washington while British families and businesses pick up the bill.
The Strait of Hormuz may be thousands of miles away, but the economic front line runs directly through Britain’s petrol stations, supermarkets, factories and homes.
The question for the Government is no longer whether the deadlock affects us. It is how much more Britons will be forced to pay before decisive diplomatic and collective action is taken.
Lt Col Stuart Crawford is a political and defence commentator and former Army officer. Sign up for his podcasts and newsletters at DefenceReview.uk.
Sources: International Energy Agency, House of Commons Library, Bank of England, ECIU fuel-cost analysis.
Lt Col Stuart Crawford is a defence analyst and former army officer. Sign up for his podcasts and newsletters at www.DefenceReview.uk
Lt Col Stuart Crawford’s latest book Tank Commander (Hardback) is available now
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