The British public could be hit with higher prices due to the war in Iran until eight months after the conflict ends, a minister has suggested.
The closure of the Strait of Hormuz, a key shipping lane that once carried a fifth of global oil and gas, has sent oil prices soaring since the US-Israeli war on Iran began.
The Government has urged drivers to keep filling up their cars as usual as higher prices hit petrol pumps and not to change their travel plans amid fears over potential jet fuel shortages.
Chief Secretary to the Prime Minister Darren Jones said the conflict will likely continue to raise prices for energy, food and flight tickets in the coming months, as potential issues around energy supplies affect production, rather than lead to shortages on supermarket shelves.
“You’re going to see prices go up a bit as a consequence of what Donald Trump has done in the Middle East,” he told the BBC’s Sunday With Laura Kuenssberg programme.
“That’s probably going to come online not just in the next few weeks, but the next few months. There’s going to be a long tail from this.”
Asked how long higher prices might remain, he suggested it would be around eight months after the Strait of Hormuz is unblocked and a de-escalation of the conflict takes place.
“I think our best guess is eight-plus months from the point of resolution that you’ll see economic impacts coming through the system,” the minister said.
Donald Trump announced an indefinite extension of the US ceasefire with Iran last week that paused most fighting, but further efforts towards ending the conflict have fallen flat after the US president told his envoys not to travel to Pakistan for talks this weekend.
The Government is stepping up planning for how to offset the impact and focusing on the live monitoring of stock levels and what plans are in place for addressing supply chain disruption.
The Prime Minister will chair another meeting of the so-called Middle East Response Committee of Cabinet set up to deal with the fallout, while a contingency planning group of ministers led by Mr Jones is meeting twice a week.
Mr Jones said: “The Government here in the UK, the work that I’m doing with the Prime Minister is looking at all of those things and saying, ‘What can we do within our power to help people to get through those difficult times?’”
The Government is seeking to secure stocks of carbon dioxide (CO2), which is used in the food industry and by breweries to make drinks fizzy as well as for defence purposes and medical uses such as MRI scanning.
Mr Jones said he is seeking to make sure there is an adequate supply of beer during the World Cup.
“I raised this issue because if there is a problem with jet fuel on holidays and carbon dioxide on beer, the summer might be pretty depressing for people, but we’re doing everything we can to make sure that it’s not the case,” he said.
UK airlines have insisted they are not currently seeing a shortage of jet fuel as they buy it in advance and airports maintain stocks, but the Government has said it is “closely monitoring” stocks.
Airports will make it easier for airlines to cancel flights without running the risk of losing their allocated “slots” – scheduled times for take-off or landing which some UK airports assign to airlines – if fuel shortages prevent them from flying.
The Government also plans to temporarily relax laws that require airlines to operate part-full flights from UK airports, The Times reported.
This would allow flight schedules to be consolidated months before any potential fuel shortages, meaning there may be fewer flight options available but minimising disruption and last-minute cancellations, the paper said.
Supermarkets have said they are working with the Government to help plan for a worst-case scenario which could see the ongoing war lead to shortages of carbon dioxide used by food producers.
On the outbreak of war, the Government provided funding to reactivate the Ensus bioethanol plant, which makes CO2 as a by-product, in order to shore up supplies of the gas.
It is also taking steps to weaken the link between electricity and gas prices to protect households and businesses from price spikes.
Leaked Government plans setting out a reasonable worst-case scenario suggested there could be shortages of certain foods on supermarket shelves if the Strait of Hormuz remains closed in the summer.
The Liberal Democrats have urged that a Bill be included in the next King’s Speech to put food security at the top of the Government’s agenda.
