Brent crude moved above $93 a barrel on Thursday as tensions around Iran and continuing disruption to Middle Eastern shipping pushed energy markets towards their highest levels in almost a month.
Brent futures rose by more than 2% during the session, while US West Texas Intermediate also advanced. Both benchmarks reached their highest levels since late July as traders reassessed the risk of continued disruption around the Strait of Hormuz.
Commodity-vessel traffic through the strait remains severely reduced. Shipping data showed only nine commodity vessels passing on both Tuesday and Wednesday, far below normal levels, although tracking information may not capture ships operating without active transponders.
Before the disruption, the Strait of Hormuz handled roughly one-fifth of global petroleum consumption, making any sustained restriction one of the most significant physical supply risks in energy markets.
Higher oil prices reach UK businesses through several channels. Road haulage, aviation, construction, agriculture, and distribution face the most direct exposure through fuel. Crude prices can also influence chemicals, plastics, packaging, manufacturing inputs, and supplier transport charges.
The increase has arrived as UK inflation moves higher again. Consumer-price inflation rose to 2.9% in July from 2.6% in June, while official business surveys show energy costs returning as a more prominent concern.
A rise in crude does not pass immediately or uniformly into company expenditure. Some businesses have fixed-price supply agreements, financial hedges, fuel surcharges, or inventories bought when prices were lower.
Sterling also matters because international oil is priced in dollars. A stronger pound can soften the domestic effect of higher dollar crude, while currency weakness compounds it.
The longer elevated prices persist, however, the more difficult it becomes to insulate budgets. Logistics operators can adjust fuel surcharges, airlines review fares or hedging programmes, and manufacturers face higher costs through multiple stages of their supply chains.
Those indirect effects are important for inflation. A short-lived oil spike may reverse without materially changing wider pricing behaviour. Persistent increases can become embedded in freight rates, supplier contracts, production costs, and wage negotiations.
That creates a challenge for monetary policy. The Bank of England cannot increase oil supply, but it has to assess whether an external energy shock is feeding into domestically generated inflation and expectations.
Companies face a comparable distinction in their own planning. A brief price move can often be absorbed through working capital and existing contracts. A prolonged period above budget assumptions can force changes to procurement, pricing, investment, and customer terms.
The current rally differs from one driven by exceptionally strong global demand. Geopolitical and physical supply risks are the principal factors, creating the possibility that energy costs rise without a corresponding improvement in the wider economic environment.
That is particularly difficult for energy-intensive companies. Revenue may remain subdued while input expenses increase, leaving businesses with limited pricing power to absorb the pressure through margins.
Shipping disruption extends the effect beyond the headline price of crude. Rerouting vessels can increase journey times, insurance premiums, charter rates, and pressure on available capacity. Alternative pipelines and export routes reduce the scale of the disruption but do not eliminate it.
Energy markets remain capable of reversing quickly if political or shipping conditions change. Prices above $93 therefore do not establish a new long-term baseline for company planning.
They do restore energy as an immediate operating issue after a period in which companies had begun to benefit from greater stability. Businesses exposed to transport, freight, manufacturing, and energy-intensive inputs must again consider how much volatility to hedge, absorb, or pass through.
The next direction in oil will depend heavily on whether traffic through the Strait of Hormuz begins returning towards normal levels. Until then, physical supply risk remains embedded in prices, adding another variable to UK inflation and operating-cost forecasts.
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