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

Global stock markets surged, and crude oil prices dropped significantly following news of a two-week ceasefire. Yet analysts remain cautious about how swiftly these gains might translate into relief for everyday consumers. The initial easing of tensions has not erased concerns about prolonged financial impacts, as supply chains and energy infrastructure in the Gulf face extensive disruption.

The past month has seen vessels transporting oil, liquefied natural gas, and fertiliser restricted from passing through the Strait of Hormuz. Damage to Gulf facilities has further curtailed production, creating bottlenecks in the global energy supply. Even if the ceasefire holds and peace is secured, experts predict months will be needed to fully restore operations and normalise supply levels.

“Much will depend on the stability of the ceasefire, whether oil shipments can move freely through the Strait of Hormuz, and the longer-term impact on oil production across the Gulf,” said Simon Williams, head of policy at the RAC. He noted that sustained lower prices, over several weeks, are essential to meaningfully reduce wholesale fuel costs.

While today’s oil price decline offers some reprieve, it remains above pre-war levels. Drivers may not see a major drop in pump prices soon, according to the RAC. However, smaller independent petrol stations, which purchase oil daily rather than locking in prices in advance, might act faster to reflect reduced costs.

Jet fuel prices have doubled since the conflict began. Willie Walsh of the International Air Transport Association (IATA) warned that even if traffic through the strait resumes now, supply levels will take months to normalise. Passengers should brace for higher ticket prices in the interim, with some airlines already raising fares and others cutting routes.

“Even if the strait opens and stays open, it will still take time for supplies to reach the required volume,” added Rachel Winter from Killik & Co. “I would expect it to take at least a few weeks, if not a few months, for pump prices to fall.”

A third of the world’s fertiliser typically passes through the Strait of Hormuz, leading to sharp price hikes. These increases have already raised the cost of food transportation across the UK and made it more expensive for farmers to operate diesel-powered machinery. Greenhouse growers, who rely on energy for heating, will also face higher costs when the energy price cap resets in July.

The Food and Drink Federation, representing thousands of UK food manufacturers, highlighted that the ceasefire has not resolved “long-term uncertainty.” Dr. Liliana Danila, the organisation’s chief economist, said recovery of Gulf supply chains and energy infrastructure could take six months to a year. “This means manufacturers will continue to feel the pressure from supply chain delays, affecting oil, gas, fertiliser, packaging, and essential cleaning chemicals for months,” she explained.

Despite the ceasefire, the federation expects UK food inflation to hit 9% by year-end. Meanwhile, Ofgem’s energy price cap has so far protected households from the recent wholesale price spike. However, the cap is due to reset in July, and the regulator is already halfway through its calculation period