Trump’s war with Iran could see fuel rationing and global recession within months, experts warn

That would mean a shortage around the world of 12 per cent of usual oil consumption, requiring fuel rationing and a big hit to world economic growth this year.

“In our prolonged Iran war scenario, we estimate the gap widens to around 13m barrels per day by the sixth month,” said head of oil and gas forecasting, Bridget Payne.

“That represents an unprecedented shortage of around 12 per cent of consumption, leading to widespread rationing concentrated in emerging economies, with significant hits to activity and supply chain disruption.

“Our modelling shows this scenario would trigger a global recession and slow world GDP growth to 1.4 per cent in 2026.”

Oxford’s research shows that the need for rationing would accelerate from the fourth month onward, with the US and Canada among the most protected from this due to both their large domestic production of oil and also their refining capabilities.

Europe, with better refining and strong government policy, sits on a middle ground - but “remains exposed if disruption is prolonged”, says the report.

“Emerging economies across the Asia Pacific and sub-Saharan Africa are the most exposed, combining heavy import dependence with limited inventory cover and, in many cases, weak fiscal and institutional capacity to manage shortages,” it adds.

There are concerns in Bangladesh that it may be the first nation to run out of fuel. Drivers have been pictured queuing for hours to fill up their tanks, while universities have closed as the nation tries to protect its diminishing reserves.

Elsewhere, a raft of countries have taken proactive steps to protect their supplies.

Egypt has ordered shops and restaurants to close early to save on energy consumption, Pakistan has enacted a four-day work week, Philippines has ordered government fuel consumption reduced and Myanmar introducing alternate driving days.

Oxford further reports “panic buying and black markets for LPG” (Liquefied Petroleum Gas) cropping up in India and petrol stations being empty in Thailand.

It comes as foreign secretary Yvette Cooper hosts talks with a coalition of countries to reopen the crucial Strait of Hormuz shipping lane.

Meanwhile, the International Monetary Fund (IMF) warned Britain’s economy is “especially exposed” to spiralling prices because of its reliance on gas‑fired power, with fertiliser supply disruption also contributing to food price inflation which is expected to surge close to 10 per cent later this year.

Keir Starmer has been cautioned the public that price rises are “inescapable” this year due to the conflict in the Middle East, but the government has repeatedly said there is no call for fuel rationing at this stage - though they remain monitoring matters “hour by hour”.

Mr Starmer has also confirmed a virtual gathering will take place on Thursday hosting over 30 nations - not including the US - with a view to finding solutions to reopen the Strait of Hormuz.

Earlier in March, a former BP chief who served as advisor to Gordon Brown when he was prime minister said that the UK should prepare for fuel shortages and urged the government to take stock to ensure “crucial sectors [like] the health service, food supply, hospitals” were amply supplied.

On Wednesday night Donald Trump made further comments to suggest the war would end in weeks rather than months, but “the military timeline differs from the economic one,” said Oxford Economics’ chief global economist Ryan Sweet in response.

“The Strait of Hormuz is still effectively closed, and the baseline assumes that it won’t change until the end of April, removing additional oil supply from the market and adding to the economic costs with each passing day.”

The firm are forecasting average prices for Brent crude oil to be at $113 across April to June. On Thursday morning it sat at $109.

“Governments have been left scrambling to try to limit the impact on companies and consumers, with more rationing of energy likely to come into play,” said Susannah Streeter, chief investment strategist at Wealth Club.

“The UK government has held off announcing short-term support for sections of society which will be worst hit by the ramp-up in energy bills, with specific help not expected until the autumn. At this stage, with the government still mulling how to alleviate the pain of the energy shock, there could still be phased in hikes to fuel duty, as planned, from September.

“The big concern will be about further damage to energy facilities across the Gulf. The repair work is already likely to take years, and further destruction is likely to keep oil and gas prices elevated for even longer. Brent crude has jumped sharply, reflecting these worries, and European and UK gas futures have also jumped and are set to stay highly volatile.

“Around a fifth of global LNG supplies are usually transported through the Strait of Hormuz, but it remains largely impassable, and it’s becoming clear that there is going to be no easy exit from this war, with a lack of planning increasingly evident.”

Meanwhile, a new report from the Office for National Statistics (ONS) has also highlighted the state of concern among British businesses over energy costs across the second half of the year.

Over half (55 per cent) of businesses expressed some level of concern about energy prices, rising to nearly three-quarters (74 per cent) for businesses with 10 or more employees. In addition, almost two in five (37 per cent) of firms with 10-plus employees said they held concerns over international conflicts impacting supply chains across the coming year.

The questions were asked of businesses during March, after the Middle East conflict had started.