Strait of Hormuz: Why the blocked waterway is sparking market chaos
The US and Israel’s war with Iran has effectively halted shipments through the Strait of Hormuz, where a fifth of global oil and liquefied natural gas normally passes along Iran’s coast, and producers have run out of storage and stopped pumping.
In the latest of near-daily reported attacks on shipping that have stopped tankers braving the strait, the UK Maritime Trade Operations Centre reported that crew aboard a bulk carrier in the Gulf had witnessed a splash and a loud bang.
After Iran chose its hardline new leader, oil prices briefly surged to nearly $120 a barrel on Monday. But by 1100 GMT on Tuesday, Brent crude had settled back down to around $92, suggesting traders now expected the disruption to end soon.
Map of the Strait of Hormuz (Getty/iStock)
Trump said on Monday that US military might was sufficient to keep oil flowing. If Iran blocks oil through the strait, “We will hit them so hard that it will not be possible for them or anybody else helping them to ever recover that section of the world,” he said.
A spokesperson for Iran’s Islamic Revolutionary Guard Corps dismissed Trump’s remarks, saying Tehran would not allow “one litre” of Middle Eastern oil to reach the US or its allies while US and Israeli attacks continue.
“We are the ones who will determine the end of the war,” the spokesperson said.
In a later Truth Social post, Trump said: “If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far.”
Rebecca Whittaker10 March 2026 16:15
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Rebecca Whittaker10 March 2026 15:45
Business and Money editor Karl Matchett reports:
Pending any late-afternoon fall-off, it has proven a strong recovery session for the FTSE 100 and Europe’s main indices.
Germany’s DAX, France’s CAC 40 and the Euro Stoxx 50 index are all up well over 2 per cent, while the FTSE 100 is up 1.77 per cent.
The reason it climbs less today is that it fell less over the past few days – that’s the defensive resilience of London’s index mix, with, for example, the energy majors rising while others were falling across last week.
In another sign of cautious optimism, US stocks have opened higher too – the S&P 500 is up 0.5 per cent and the Nasdaq up 0.75 per cent.
Of course, any soundbites from US-based politicians in the coming hours could yet affect much, especially if there’s any hint that matters in Iran will not be wrapped up as fast as the president suggested yesterday.
For now, Brent crude oil remains at around $87.50, a drop of more than 11 per cent since yesterday – yet still considerably higher than before the strikes started.
Rebecca Whittaker10 March 2026 15:28
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Rebecca Whittaker10 March 2026 15:15
Analysis: OBR admission on inflation is terrible news for Reeves
Political editor David Maddox reports:
While Professor David Miles of the Office for Budget Responsibility (OBR) was trying to play down the impact of Donald Trump’s war on Iran’s impact on the economy he could not mask the “unwelcome” news about inflation.
The fact is that he now estimates inflation will be 50 per cent higher at the end of the year than the estimate the OBR produced for last week’s Spring Statement.
So instead of ending the year at 2per cent inflation it is more likely to be 3 per cent.
This is perhaps not a surprise given that the OBR estimates were done weeks before the war and the Spring Statement itself.
The even bigger problem was that falling inflation was the only figure produced last week which justified Ms Reeves’ rather bold claims that her plan is working on the economy.
Every other indicator was bad – particularly growth estimates downgraded and unemployment expected to go up.
So with inflation now getting worse as well it makes the beleaguered chancellor’s job even harder and suggests everything is going in the wrong direction under her stewardship.
Professor David Miles of the Office for Budget Responsibility (OBR) (Getty)
Rebecca Whittaker10 March 2026 15:08
OBR questions whether government can afford a 2022 style energy bail out
Political editor David Maddox reports:
Professor David Miles from the Office for Budget Responsibility (OBR) has questioned whether in a worst case scenario the UK could now afford an energy price bailout similar to the one Liz Truss brought in after Russia’s invasion of Ukraine.
He told MPs: “I think the cost of the support package ban in 2022 was very substantial – something like £50bn.”
However, he suggested that there may not be the need for a similar package with the Middle East war.
“That was for a very much bigger increase [in energy prices], particularly in gas prices, than we are seeing at the moment.”
He pointed out that in 2022 gas prices were up 500 per cent whereas currently they are up 50 per cent.
But he added: “If you get a shock large enough then 50bn is a big number in the context where you have got £23bn [of headroom from the Budget] which underlines how difficult it would be to have a support package like that.”
Rebecca Whittaker10 March 2026 14:54
The UK doesn’t have only two days’ supply of gas left: Here’s why you shouldn’t panic
A government minister has criticised “dangerous scaremongering” following claims that Britain has just two days of gas stored despite threats of disruption from the US-Iran conflict.
The reports emerged after analysis of data from National Gas – which owns and operates the nation’s gas transmission system – showed that it had 6,999 gigawatt hours (GWh) of fossil gas stored on Saturday. This is down from 9,105 GWh a year earlier.
These claims are based on some small truth: if the UK were to use only gas currently in storage without replenishment, it would run out in around 3.5 days (based on average nationwide use of 2,000 GWh a day).
However, storage increased to 7,510 GWh on Tuesday, showing that the claims perhaps aren’t as concerning as they appear.
Read more here by Albert Toth:
Rebecca Whittaker10 March 2026 14:50
Conflict in the Middle East could cause inflation to be nearer 3%
The Office for Budget Responsibility has said conflict in the Middle East could mean UK inflation ends the year closer to 3 per cent, versus the current 2 per cent forecast, should energy prices stay as they are.
(Gareth Fuller/PA)
Rebecca Whittaker10 March 2026 14:43
British Airways to suspend its daily rescue flights
British Airways has announced it will suspend its daily rescue flights from Muscat “due to reduced demand”.
It added that the suspension of its flights to the rest of the region will continue until at least later this month because of “the continuing uncertainty of the situation in the Middle East and airspace instability”.
British Airways (James Manning/PA) (PA Archive)
The airline said: “We’ve cancelled all flights to and from Amman, Bahrain, Doha, Dubai and Tel Aviv until later this month and to and from Abu Dhabi until later this year.
“We’re keeping the situation under constant review and are in touch with our customers to offer them a range of options.
“We have limited seats remaining on our repatriation flights from Oman (Muscat) to London Heathrow on 11 and 12 March for customers with an existing booking.
“Following these dates, the flights will pause due to reduced demand but will be kept under continuous review.”
Rebecca Whittaker10 March 2026 14:41
OBR upgrades inflation estimate by 50 per cent because of the Iran war
Political editor David Maddox reports:
Professor David Miles has been asked about the impact of the Iran war on the Office for Budget Responsibility (OBR) forecasts in the spring statement last week.
Prof Miles along with Tom Josephs produced the OBR estimates weeks before the war began and has now told MPs that he believes inflation will be nearer 3 per cent by the end of this year rather than 2 per cent.
He told the Commons Treasury select committee: “It’s a very fast moving situation. Prices in the oil and gas market have moved around a great deal. He noted that spot prices (the price oil is sold at) are up by just above 20 per cent.
“Relative to the picture we had taken where the markets were they are up a bit more than and gas prices up 50 to 55 per cent.”
He said: “If things stayed the same…we had thought taking it all into account inflation would be around 2 per cent. We think inflation would now be nearer 3 per cent.”
He added: “Materially significant but as yet not on the same scale of Russia’s invasion of Ukraine. It is enough to be noticeable and definitely not welcome.”
Rebecca Whittaker10 March 2026 14:38