How the Iran war affects your money and bills
How the Iran war affects your money and bills
Pump Prices and Fuel Costs
Drivers in the UK have already felt the financial strain of the US-Israel conflict with Iran, as fuel prices have climbed steadily. Crude oil costs have surged since the war began, though fluctuations remain common due to ongoing developments in the conflict and statements from the White House. According to the motoring group RAC, the average petrol price reached 158.27p per litre by 13 April, marking an increase of over 25p compared to pre-war levels. Diesel prices have risen even more sharply, reaching 191.5p per litre—a rise of nearly 49p since March. This has added £14 to the cost of filling a 55-litre family car with petrol and £27 for diesel.
“The situation remains highly volatile, and any price drops will hinge on the outcome of peace discussions,” said Simon Williams, RAC’s policy head.
Mortgage Rates and Lending Trends
UK mortgage rates have also risen in response to the conflict, disrupting earlier expectations of steady declines. Lenders have adjusted their offerings quickly, citing higher funding costs and a revised outlook on base interest rates. The average two-year fixed rate has climbed from 4.83% in early March to 5.89% currently, while five-year deals have seen a jump from 4.95% to 5.77%. Amid economic uncertainty, some lenders have withdrawn products from the market, reducing the range of options available. Moneyfacts reports about 1,500 fewer residential mortgage deals are now listed, though over 6,000 remain for selection.
Energy Bills and Price Caps
Energy costs are another area of concern, as the conflict has influenced wholesale market dynamics. While a price cap in England, Wales, and Scotland has temporarily shielded some households from sharp increases, its coverage is limited in duration. The cap applies to variable energy deals until July, but changes in the wholesale market from late May onward will shape summer bills. Cornwall Insight forecasts that a typical dual-fuel household could see annual energy costs rise to £1,861 under the July-to-September price cap, up from the current £1,641. This projection is subject to adjustment depending on the conflict’s trajectory.
Previously, a spike in energy prices following the pandemic and Russia’s invasion of Ukraine prompted government intervention via the Energy Price Guarantee (EPG). Similar measures may be needed if the Iran conflict prolongs economic instability. Motoring groups advise drivers to cut back on unnecessary trips and adjust driving habits to save fuel. Even for those without cars, higher fuel costs can indirectly affect everyday expenses, such as groceries, when transport costs rise.
